ACA-Related FAQs Address Limitations On Cost-Sharing, Summary Of Benefits And Coverage

The Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (the Departments) have jointly issued another set of frequently asked questions (FAQs) about the implementation of the Patient Protection and Affordable Care Act (ACA). The FAQs address an array of topics, including limitations on cost-sharing, coverage of preventive services, health flexible spending account (FSA) carryover, the summary of benefits and coverage (SBC), and the continuing application of previously issued enforcement and transition relief guidance. The FAQs also address proposed amendments to COBRA’s notice requirements.

Limitations on cost-sharing. Public Health Service Act (PHSA) Sec. 2707(b) provides that a non-grandfathered group health plan shall ensure that any annual cost-sharing imposed under the plan does not exceed the limitations provided for under ACA Sec. 1302(c)(1), which limits an enrollee’s out-of-pocket costs.

The FAQs indicate that HHS has proposed that, after applying the premium adjustment percentage as described in ACA Sec. 1302(c)(4), the annual limitation on out-of-pocket costs for 2015 would be $6,600 for self-only coverage and $13,200 for coverage other than self-only coverage.

Out-of-pocket maximums. As stated in previous FAQs, the Departments reiterate that if a plan includes a network of providers, the plan may, but is not required to, count out-of-pocket spending for out-of-network items and services toward the plan’s annual out-of-pocket maximum. A plan that counts such spending towards the out-of-pocket maximum may use any reasonable method for doing so.

This situation may arise where an out-of-network provider charges an amount greater than the plan’s or issuer’s allowed amount and an individual pays the amount in excess of the allowed amount (also known as balance billing).

Brand-name drugs. The FAQs also address how large group market coverage and self-insured group health plans should treat an individual’s out-of-pocket costs for a brand-name prescription drug when a generic was available and medically appropriate. As stated in previous FAQs, such plans have discretion to define “essential health benefits.” For example, a plan may include only generic drugs, if medically appropriate (as determined by the individual’s personal physician) and available, while providing a separate option (not as part of essential health benefits) of electing a brand-name drug at a higher cost sharing amount.

If, under this type of plan design, a participant or beneficiary selects a brand-name prescription drug in circumstances in which a generic was available and medically appropriate, the plan may provide that all or some of the amount paid by the participant or beneficiary (e.g., the difference between the cost of the brand-name drug and the cost of the generic drug) is not required to be counted towards the annual out-of-pocket maximum. For ERISA plans, the SPD must explain which covered benefits will not count towards an individual’s out-of-pocket maximum.

Reference-based pricing. Until guidance is issued and effective, with respect to a large group market plan or self-insured group health plan that utilizes a reference-based pricing program, the Departments will not consider a plan or issuer as failing to comply with the out-of-pocket maximum requirements of PHSA Sec. 2707(b) because it treats providers that accept the reference amount as the only in-network providers, provided the plan uses a reasonable method to ensure that it provides adequate access to quality providers.

For non-grandfathered health plans in the individual and small group markets that must provide coverage of the essential health benefit package under ACA Sec. 1302(a), additional requirements apply.

The Departments invite comment on the application of the out-of-pocket limitation to the use of reference-based pricing. The Departments are particularly interested in standards that plans using reference-based pricing structures should be required to meet to ensure that individuals have meaningful access to medically appropriate, quality care. Send comments by August 1 to

Coverage of preventive services. The FAQs indicate that the Departments will consider a group health plan or health insurance issuer to be in compliance with the requirement to cover tobacco use counseling and interventions, if, for example, the plan or issuer covers without cost-sharing:

• screening for tobacco use, and
• for those who use tobacco products, at least two tobacco cessation attempts per year. For this purpose, covering a cessation attempt includes coverage for:

o four tobacco cessation counseling sessions of at least ten minutes each (including telephone counseling, group counseling and individual counseling) without prior authorization; and
o all Food and Drug Administration (FDA)-approved tobacco cessation medications (including both prescription and over-the-counter medications) for a 90-day treatment regimen when prescribed by a health care provider without prior authorization.

Health FSA carryover. Unused carry over amounts remaining at the end of a plan year in a health FSA that satisfy the modified “use-or-lose” rule should not be taken into account when determining if the health FSA satisfies the maximum benefit payable limit prong under the excepted benefits regulations, according to the FAQs.

Summary of benefits and coverage. The Departments issued FAQs in April 2013 providing guidance for SBCs provided with respect to coverage beginning on or after January 1, 2014, and before Jan. 1, 2015 (“the second year of applicability”). An updated SBC template (and sample completed SBC) were made available in April 2013 for the second year of applicability. The current FAQs provide that until further guidance is issued, those documents continue to be authorized. There are no changes to the uniform glossary or the “Why This Matters” language for the SBC. There also are no changes to the Instructions for Completing the SBC.

Enforcement and transition relief. The FAQs also provide that until further guidance is provided, previously issued enforcement and transition relief guidance continues to apply with respect to:

• ACA Implementation FAQs Part VIII, Q2 (regarding the Departments’ basic approach to implementation of the SBC requirements during the first year of applicability);
• ACA Implementation FAQs Part VIII, Q5 (regarding use of carve-out arrangements);
• ACA Implementation FAQs Part IX, Q1 (regarding the circumstances in which an SBC may be provided electronically);
• ACA Implementation FAQs Part IX, Q8 (regarding penalties for failure to provide the SBC or uniform glossary);
• ACA Implementation FAQs Part IX, Q9 (regarding the coverage examples calculator; and related information related to use of the coverage examples calculator);
• ACA Implementation FAQs Part IX, Q10 (regarding an issuer’s obligation to provide an SBC with respect to benefits it does not insure);
• ACA Implementation FAQs Part IX, Q13 (regarding expatriate coverage)
• ACA Implementation FAQs Part X, Q1 (regarding Medicare Advantage);
• ACA Implementation FAQs Part XIV, Q2 (regarding providing information about MEC and MV without changing the SBC template);
• ACA Implementation FAQs Part XIV, Q3 (removal of the row on the SBC template related to annual limits information);
• ACA Implementation FAQs Part XIV, Q6 (an enforcement safe harbor related to closed blocks of business);
• ACA Implementation FAQs Part XIV, Q7 (regarding the anti-duplication rule for student health insurance coverage); and
• The Special Rule contained in the Instruction Guides for Group and Individual Coverage.

Note that this guidance supersedes any previous subregulatory guidance (including FAQs) stating that certain enforcement relief for the SBC and uniform glossary requirements is limited to the first or second year of applicability.

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