On May 16, 2014, HHS issued the final rule on exchange and insurance market standards, effective for 2015 and beyond. The rule will be published in the Federal Register on May 27, 2014. The final rule addresses a wide number of provisions, including: the discontinuation of certain products, clarifications on the SHOP exchanges, guidance for both navigator and non-navigator assistance personnel, quality reporting, nondiscrimination standards (for health care providers), minimum certification standards and responsibilities of issuers and premium stabilization and enforcement remedies, among other provisions.
The rule also provides for a modification of the reinsurance contributions if the actual contributions do not meet projections, allows for certain changes to the risk corridors calculation and modifications for the way that the annual limit on cost sharing is calculated, provides for clarifications on indexing the contributions used to determine eligibility from the individual mandate, updates standards for consumer assistance programs and standards related to the opt-out provisions for self-funded, non-federal governmental plans under HIPAA, and provides for certain changes with respect to exchange appeal standards and coverage enrollment/termination standards. Finally, time-limited adjustments to standards related to the MLR program are included.
While nearly all of these provisions do not directly affect employers sponsoring group health plans, some of these provisions have an indirect effect. For example, the rule requires that individual fixed indemnity insurance products can only be sold going forward to individuals who have other health coverage that is minimum essential coverage in order for such products to continue to be considered an excepted benefit. Essentially, an individual purchasing a fixed indemnity policy must perform a one-time attestation upon issuance of the first policy issued on or after Jan. 1, 2015, that the individual has minimum essential coverage, and those policies may only pay a fixed-dollar amount per period of hospitalization or illness and/or per service (consistent with the group market rule on hospital and fixed indemnity policies). Employers who currently facilitate the purchase of an individual fixed indemnity product to employees should be aware of the changes affecting these plans and contact your insurance advisor for assistance.
In another significant change, state exchanges were previously planning to rely upon the federal HHS to conduct verifications of enrollment in eligible employer-sponsored plans for purposes of eligibility for employees who sought an advance premium tax credit for determinations made on or after Jan. 1, 2015. However, HHS has determined that state exchanges will have to perform their own separate verifications of enrollment in employer-sponsored plans instead of relying on HHS to act as a comprehensive national resource to perform the advance premium tax credit determinations. States administering their own exchanges will be able to implement sample-based reviews to determine eligibility for premium tax credits beginning Jan. 1, 2016. This change will not affect eligibility determinations made in states being run by the federally facilitated exchange.
The rule also finalizes rules for self-funded, non-federal governmental plans to opt out of certain provisions under HIPAA that have previously been in effect, including benefits for newborns and mothers, parity in mental health and substance use disorder benefits, required coverage for reconstructive surgery following mastectomies, and coverage of dependent students on a medically necessary leave of absence. However, the rule finalizes the amendments with one clarification: that in the case of a plan sponsor submitting opt-out elections for more than one collectively bargained health plan, each plan must be separately listed in the opt-out election, or in the case of group health plans not subject to a collective bargaining agreement, the sponsor must submit separate election documents for each plan.
A new notice requirement will apply for insurers who are discontinuing policies in the individual and small group markets. These discontinuation notices will be provided to all enrollees under the plan or coverage at least 90 days prior to the discontinuation. Thus, small employers who took advantage of an early renewal strategy and continue to sponsor a PPACA non-compliant plan should be aware that enrollees in the plan will begin to receive such discontinuation notices, even if the employer intends to transition the coverage to a PPACA-compliant plan for the 2014 – 2015 plan year.
There were additional clarifications with respect to the special enrollment periods available for individuals to enroll on exchange coverage midyear. You may recall that employers are required to comply with midyear qualifying events as governed by Section 125 for pretax elections, as well as HIPAA special enrollment rights, but are not responsible for advising employees on what special enrollment periods are available through the exchanges. However, some employers may find it beneficial to be familiar with such requirements as explained in this final rule in the event an employee requests to move off of the employer-sponsored plan and enroll in exchange coverage.
Finally, with respect to SHOP exchanges, there was an additional one-year delay to implement the employee-choice provision in SHOP coverage in cases where an insurance commissioner in a state submits evidence that delaying employee choice will be in the best interest of small employers if implementing employee choice would cause issuers to price their products and plans higher than they would otherwise price them. State insurance commissioners whose states are participating in the federally facilitated SHOP (FF-SHOP) must submit their recommendations as to whether employee choice will be implemented on or before June 2, 2014. Also with respect to SHOP exchanges, the final rule clarified that the open enrollment period in FF-SHOPs will occur between Nov. 15 and Dec. 15 each year, and group coverage purchased during this time frame is not subject to employer contribution or group participation rules. Minimum participation requirements will be enforced upon initial enrollment and at renewal outside of this window. State-based SHOPs may begin the 2015 employer and employee election periods prior to Nov. 15, 2014, in a manner that works with their small group markets.
Final Exchange Rule