Recently issued guidance addresses the unique compliance issues surrounding expatriate health plans under the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (ACA).
In Frequently Asked Questions (FAQs) XIII under the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (ACA), issued on March 8, 2013, the U.S. Departments of Labor, Health and Human Services, and the Treasury (collectively, the Departments) acknowledge that expatriate health plans face unique challenges in reconciling and coordinating the different regulatory regimes and rules under U.S. and international law. The Departments note that because of the nature of global health plan benefits, expatriate health plans may have difficulty complying with certain ACA requirements, including the use of independent review organizations, coverage of preventive care services, and standardized participant disclosures and communications. This guidance provides temporary transitional relief for certain expatriate health plans from the requirements of subtitles A and C of Title I of ACA, which include the (i) individual and group market reforms; (ii) prohibitions on annual and lifetime limits, rescissions, excessive waiting periods, preexisting condition exclusions and other discrimination based on health status; (iii) mandate to offer dependent coverage until age 26; and (iv) new claim and appeal rights. The temporary transitional relief only applies for plan years ending on or before December 31, 2015.
Plans Eligible for the Transitional Relief
Under the relief, an “expatriate health plan” is an insured group health plan that limits enrollment to primary insureds who reside outside of their home country for at least six months of the plan year, and any covered dependents. The relief does not apply to self-insured expatriate group health plans. Therefore, if an employer sponsors a self-insured expatriate health plan that is otherwise subject to the Employee Retirement Income Security Act of 1974 (ERISA), the self-insured plan must continue to comply with all applicable ACA requirements.
The Departments also note that in order to qualify for the transitional relief, expatriate health plans must comply with the pre-ACA requirements of the Public Health Service Act, ERISA and the Internal Revenue Code (Code), including, but not limited to, the mental health parity rules and the Health Insurance Portability and Accountability Act nondiscrimination provisions.
Minimum Essential Coverage
This guidance also clarifies that coverage provided under an expatriate group health plan is a form of minimum essential coverage under Section 5000A of the Code. This means that the opportunity to enroll in an expatriate group health plan will be considered an opportunity to enroll in minimum essential coverage for purposes of determining whether an employer satisfies the employer shared responsibility rules (pay or play). Of course, employers must evaluate employee populations (including hours worked outside of the United States and foreign source income) to determine whether, and to what extent, the pay or play rules apply to an expatriate group health plan.
Employers should review their global health plan benefits to determine whether the relief provided by FAQs XIII applies to those benefits. If the relief applies, employers should contact insurers to discuss whether and to what extent each expatriate health plan will utilize the transitional relief. Employers should work with insurers to review and amend enrollment materials and plan documents, update summary plan descriptions and revise other employee communications as necessary to reflect any changes. Employers that provide self-insured benefits to their expatriate employees subject to ACA should engage in a cost-benefit analysis to determine whether an insured arrangement would be more beneficial given this guidance.