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Agencies Issue FAQs on Coverage Notification For Health Exchanges, Other ACA Issues

Monday, January 28, 2013

Employers will not need to notify new and current employees of coverage available under the health insurance exchanges until regulations outlining the notification requirements are issued, according to the 11th set of frequently asked questions-and-answers on implementation of the Affordable Care Act, issued Jan. 24 by the Treasury Department and two other federal agencies.

The ACA added Section 18B to the Fair Labor Standards Act, requiring all employers subject to FLSA to notify current employees and new hires that they can obtain coverage through an exchange. The requirement was to go into effect March 1, 2013. However, “Section 18B of the FLSA provides that employer compliance with the notice requirements of that section must be carried out '[i]n accordance with regulations promulgated by the Secretary [of Labor],' ” and no such regulations have been released, the departments of Treasury, Labor, and Health and Human Services said in the FAQs.

Accordingly, “until such regulations are issued and become applicable, employers are not required to comply with FLSA section 18B,” the FAQs said.

The notices to employees should be distributed at a “meaningful time,” the agencies said, thus the departments expect the new applicability date will be in the late summer or fall, when open enrollment for the exchanges begins.

Health Reimbursement Arrangements

The FAQs also look at health reimbursement arrangements and their compliance with the Public Health Service Act.

ACA added Section 2711 of the PHSA, which “generally prohibits plans and issuers from imposing lifetime or annual limits on the dollar value of essential health benefits,” according to the FAQs. DOL interim final regulations implementing Section 2711 of the act differentiate between HRAs that are “integrated” with group health plan coverage and HRAs that are not integrated with coverage, also called “stand-alone” HRAs, the FAQs said.

According to the FAQs, an HRA “used to purchase coverage on the individual market” is not considered integrated with the coverage it purchased and therefore does not satisfy Section 2711 of the PHSA. The agencies plan to issue guidance stating that “an employer-sponsored HRA cannot be integrated with individual market coverage or with an employer plan that provides coverage through individual policies and therefore will violate PHS Act section 2711,” the FAQs said.

Additionally, an employer-provided HRA will only be treated as integrated with group health plan coverage if the employee in the HRA actually is enrolled in the health plan, not just if the employee is offered the coverage, the FAQs said. The departments also plan on issuing guidance on this topic, the FAQs said.

Other topics covered by the FAQs include self-insured employer prescription drug coverage supplementing Medicare Part D and fixed indemnity insurance.


Text of the FAQs is at http://www.dol.gov/ebsa/faqs/faq-aca11.html.


 

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