Monday, November 1, 2010

FAQs Increasingly Important In Health Reform Implementation

Grandfathered health plans under the Patient Protection and Affordable Care Act (ACA) can comply with the required disclosure requirement if they include the model disclosure language whenever a summary of the benefits under the plan is provided to participants and beneficiaries, according to the most recent questions and answers released by the Department of Labor’s Employee Benefit Security Administration.

This is the fourth in a series of frequently asked questions (FAQs) released by EBSA in order to “answer questions from stakeholders with a view to helping people understand the new law and benefit from it” (see Part I, Part II, Part III, and Part IV). EBSA and other agencies increasingly are turning to FAQs and other non-regulatory releases to provide guidance that helps employers and individuals comply with federal laws and regulations (see here, for example).

In “FAQs About the Affordable Care Act Implementation, Part IV,” this question is posed, “Must a grandfathered health plan provide the disclosure statement every time it sends out a communication, such as an EOB (explanation of benefits), to a participant or beneficiary?”

EBSA notes that “many plans distribute summary plan descriptions upon initial eligibility to receive benefits under the plan or coverage, during an open enrollment period, or upon other opportunities to enroll in, renew, or change coverage. While it is not necessary to include the disclosure statement with each plan or issuer communication to participants and beneficiaries (such as an explanation of benefits), the Departments encourage plan sponsors and issuers to identify other communications in which disclosure of grandfather status would be appropriate and consistent with the goal of providing participants and beneficiaries information necessary to understand and make informed choices regarding health coverage.”  In other words, ongoing communication may not be required but certainly is encouraged.

The EBSA release also confirms that certain plans that offer nonessential benefits under the ACA may impose lifetime limits in these plans. According to EBSA, the following type of plan, which imposes a per-child lifetime dollar limit on benefits provided under such plans, does not violate the lifetime limit prohibition:

  • operated before enactment of the Affordable Care Act ),

  • reimburses expenses for special treatment and therapy of eligible employees’ children with physical, mental, or developmental disabilities,

  • operated separately from the employer’s primary medical plans,

  • employees who are otherwise eligible may participate in the plan without participating in those primary medical plans.

More guidance in the form of FAQs can be expected on grandfathered plans, nonessential benefits, and other aspects of the ACA.

For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform and other developments in employee benefits, just click here.

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