More regs issued on ACA market reforms

Have you finished digesting the new rules on coverage of adult children and on grandfathered plans under the Affordable Care Act? That's good, because more interim final guidance regarding ACA's market reforms has been issued this week.

The regulations provide detailed guidance on four separate health insurance provisions in the Patient Protection and Affordable Care Act (ACA; P.L. 111-148): (1) prohibition of preexisting condition exclusions (Public Health Service Act Sec. 2704); (2) No lifetime or annual limits (PHSA Sec. 2711); (3) Prohibition on rescissions (PHSA Sec. 2712); and (4) Patient protections (PHSA Sec. 2791A).

The interim final rules are effective August 27, 2010 and are applicable to plan years beginning on or after September 23, 2010.

Preexisting condition exclusions. The regs define such exclusions as a limitation or exclusion of benefits (including a denial of coverage) based on the fact that the condition was present before the effective date of coverage (or if coverage is denied, the date of the denial), whether or not any medical advice, diagnosis, care, or treatment was recommended or received before that day. A preexisting condition exclusion includes any limitation or exclusion based on a pre-enrollment questionnaire or physical examination given to the individual, or review of medical records relating to the pre-enrollment period.

Annual and lifetime benefit limits. ACA's ban on annual/lifetime limits applies in 2014. Until then, under the new regs, a group health plan may establish an annual limit on the dollar amount of benefits that are essential health benefits, but must provide a minimum limit. For plan years beginning on or after September 23, 2010, the limit is $750,000; for plan years beginning on or after September 23, 2011, the limit is $1,250,000; and for plan years beginning on or after September 23, 2012 (but before January 1, 2014), the limit is $2,000,000.

Rescissions. The ACA prohibits coverage rescissions, defined in the interim final rules as a cancellation or discontinuance of coverage that has a retroactive effect. For example, a cancellation that treats a policy as void from the time of the individual’s or group’s enrollment is a rescission. A cancellation of coverage is not a rescission if the cancellation has only a prospective effect.

Patient protections. The ACA also requires that plans allow enrollees to select, when the plan requires it, any primary care provider that participates in the plan’s network.

For a comprehensive analysis of the Affordable Care Act, and additional information on health reforms and otehr developments in employee benefits, just click here.