Expatriate Plans Exempted from Many Affordable Care Act Provisions

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By Edward I. Leeds, Esq.

Ballard Spahr LLP, Philadelphia, PA

In the Consolidated and Further Continuing Appropriations Act (the recently enacted federal budget bill often known as the "CRomnibus" legislation), Congress has exempted health plans designed to cover expatriates from most of the requirements of the Affordable Care Act.  The exemption will generally apply where a group health plan provides significant health coverage and substantially all of the covered employees fall under any of the following categories:

  •  Employees who work outside of the 50 states, Washington, D.C., or Puerto Rico for at least 180 days in a 12-consecutive month period.
  •  Foreign nationals transferred to the United States for a specific and temporary purpose or for a job-related assignment.
  •  Employees who are part of a unit established to perform services internationally for a tax-exempt organization (where the Department of Health and Human Services recognizes the need for expatriate coverage).

Although the exemption is extensive, expatriate plans must continue to meet certain ACA requirements. For example:

  •  The employer mandate continues to apply, but the coverage provided by an expatriate plan will be deemed to be minimum essential coverage for purposes of complying with the mandate (and for purposes of the individual mandate).
  •  Reporting requirements relating to the employer and individual mandates will apply, although electronic distribution of applicable forms will be permitted without participant consent.
  •  The Cadillac tax, scheduled to take effect in 2018, will apply to certain foreign nationals working in the United States.
  •  If the expatriate plan covers dependents, it must generally provide coverage up to age 26.

By its terms, the new exemption applies only to health plans issued or renewed on or after July 1, 2015. However, for many expatriate plans, there are currently exemptions in place for market reforms and certain fees and assessments required under the ACA. We would be glad to help you evaluate whether any of the current or future exemptions apply to the health coverage provided to your expatriate employees.

As the federal health care reform effort gained steam, Ballard Spahr attorneys established the Health Care Reform Initiative] to monitor and analyze legislative developments. With federal health care reform now a reality, our attorneys are assisting health care entities and employers in understanding the relevant changes and planning for the future. They also have launched the Health Care Reform Dashboard, an online resource center for news and analysis on developments under the Affordable Care Act.

If you have questions about this alert or other ACA-related considerations, please contact Edward I. Leeds at 215.864.8419 or leeds@ballardspahr.com, Brian M. Pinheiro at 215.864.8511 or pinheiro@ballardspahr.com, Jean C. Hemphill at 215.864.8539 or hemphill@ballardspahr.com, Diane A. Thompson at 424.204.4334 or thompsonda@ballardspahr.com, or any other member of the Employee Benefits and Executive Compensation or Health Care Groups with whom you work.

For more information, in the Tax Management Portfolios, see Cowart, 389 T.M., Medical Plans — COBRA, HIPAA, HRAs, HSAs and Disability,  and in Tax Practice Series, see ¶5920, Health & Disability Plans.

Copyright © 2015 by Ballard Spahr LLP.

(No claim to original U.S. government material.)