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Agencies Publish Final Regulations on Assortment of ACA-related Topics
On November 18, 2015, the DOL, Treasury and HHS published final regulations (“the Final Rules”) pertaining
to an assortment of ACA-related topics, including grandfathered health plans, preexisting condition exclusions,
lifetime and annual dollar limits on benefits, rescissions, and age 26 dependent coverage, among others. While
the Final Rules contained several clarifications to existing rules, they primarily function as a compilation of
earlier-released guidance from the agencies.
What Has Changed?
What follows is a brief summary of the highlights of the Final Rules, with a focus on what is new and what has
changed:
 Grandfathered Plans
The Final Rules preserve the current rule that grandfathered status is determined separately with respect to
each “benefit package” made available under a group health plan. They also adopt two existing “anti-abuse”
rules aimed at curtailing attempts by plan sponsors to retain grandfathered status through indirect plan changes,
and add new clarifying examples.
The Final Rules also describe changes that would cause a plan to lose grandfathered status, explaining, for
example, how increases in the copay amount could lead to the loss of grandfathered status. The Final Rules
also clarify that plan sponsors must continue to include a statement that their plan is grandfathered and contact
information for questions and complaints in any benefit summaries that are provided. The Final Rules include a
model disclosure that employers may choose to use.
 Multiemployer Plans and Grandfathered Status
A significant clarification unveiled in these Final Rules was that multiemployer plans adding a new contributing
employer or a new group of employees won't trigger a loss of grandfathered status under the ACA.
 Preexisting Condition Exclusions
While the Final Rules adopt previously-released guidance on preexisting condition exclusions, they also clarify
that these rules do not prohibit plans or issuers from excluding all benefits for a condition if they do so
regardless of when the condition arose relative to the effective date of coverage. That being said, the Final
Rules also note that other rules and laws (for example, the essential health benefit (EHB) requirements currently
applicable in the individual and small group markets), may preclude such exclusions.
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 Lifetime and Annual Dollar Limits
The Final Rules clarify that group health plans (including both fully-insured and self-insured plans) that are not
required to cover EHB are still prohibited from imposing annual or lifetime dollar caps on EHB that they do offer.
Further, the rules clarify that lifetime and annual dollar limits are prohibited regardless of whether such benefits
are provided on an in-network or out-of-network basis. This is a significant change because these rules are
currently only applicable to in-network benefits.
 HRAs and Lifetime and Annual Dollar Limits
The Final Rules retain existing guidance for HRAs and other account-based plans that are permitted only if
"integrated" with a group health plan that complies with ACA requirements (including the prohibition on lifetime
and annual dollar limits). The Final Rules also clarify that a forfeiture of amounts under (or waiver of
reimbursements under) an HRA will comply with the integration requirements even if amounts may be
reinstated on a future date, upon death, or the earlier of the two dates.
 Rescissions (Cancellations of Coverage)
The Final Rules finalize previously-released guidance providing that the prohibition on rescissions is not
violated if a plan retroactively terminates coverage due to a failure to pay required contributions (including
COBRA premiums), and that individuals who provide inaccurate information about tobacco use may be charged
higher tobacco premiums retroactive to the beginning of the plan year even though their coverage may not be
terminated due to their misrepresentation in this situation.
 Age 26 Dependent Coverage
With respect to the age 26 dependent coverage rule, the Final Rules clarify that adult children under age 26
must be offered coverage even if they do not live, work or reside in a particular service area, but this
requirement does not impact the extent to which plans and insurers are required to cover out-of-network
services for adult children. The Final Rules also clarify that the terms of health plans providing dependent
coverage for children under age 26 cannot vary based on the age of the child (for example, such plans cannot
impose age-based surcharges or eliminate benefit package offerings on the basis of age).
 Claims and Appeals Procedures
Without any substantial changes, the Final Rules finalize an extensive set of rules on claims and appeal
processes issued in prior interim rules. One more notable change applies to “NAIC-similar” external review
processes. As background, self-insured plans and issuers in states that do not have external review provisions
that meet the National Association of Insurance Commissioner’s (NAIC) Model Act standards must use an
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external review process that meets HHS standards. For a transitional period, HHS has allowed plans to use
“NAIC-similar” external review processes that do not meet all of the requirements of the NAIC Model Act. The
Final Rules extend this transitional period for using NAIC-similar external review processes until December 31,
2017.
In addition, the temporary rule applying the external review process to claims that involve medical judgment and
rescissions is made permanent, and two new items are added to the list of adverse benefit determinations that
are considered to involve a medical judgment:
(1) a plan or issuer’s determination of whether a participant or beneficiary is entitled to a reasonable alternative
standard for a reward under a wellness program, and
(2) a plan or issuer’s determination of whether a plan is complying with the non-quantitative treatment limitation
provisions of the Mental Health Parity and Addiction Equity Act (MHPAEA), and its implementing regulations.
 Patient Protections
Under the Final Rules, health plans that require participants and beneficiaries to select a primary care physician
can now require participants to use in-network providers within specified geographic limits when designating a
primary care provider. The Final Rules also clarify when and how balance billing (that is, billing patients for the
excess of the providers’ billed charges over benefits paid by the plan and other patient payments, such as
copayments or coinsurance) is permitted for out-of-network emergency care, and clarify that cost-sharing
requirements expressed as a copay amount or coinsurance rate imposed for out-of-network emergency
services cannot exceed the cost-sharing requirements that would be imposed if the services were provided innetwork.
When Do the Final Rules Go Into Effect? What Do Employers Have to Do Next?
Fortunately, there is nothing that needs to be done immediately. The Final Rules are effective for plan years
beginning on or after January 1, 2017, so there is plenty of time for plan sponsors to make changes to ensure
compliance with these rules.
Corporate Synergies will continue to monitor the law and provide updates and guidance as it is necessary. For a
deeper understanding of healthcare reform, we encourage you to visit corpsyn.com for articles and eAlerts on
this subject. If you have questions regarding the information within this eCommunication, please call Corporate
Synergies at 866.CSG.1719 or CLICK HERE to contact us today.