By Amy M. Gordon, Esq., Susan M. Nash, Esq., Elizabeth A. Savard, Esq., and Jamie A. Weyeneth, Esq.
McDermott Will & Emery, LLP, Chicago, IL
The U.S. Departments of Health and Human Services, Labor and Treasury have recently released new guidance regarding various health care reform requirements. Most notably:
Coverage of Adult Dependent Children: A plan that covers dependents that are not described in §152(f)(1) of the Internal Revenue Code (i.e., dependents other than sons, daughters, stepchildren, adopted children, children placed for adoption and foster children) can impose additional conditions on eligibility for those dependents. For example, a plan can continue to cover grandchildren, children of domestic partners and children for whom an employee is a legal guardian only if the child is a dependent for federal income tax purposes.
Internal Claims and Appeals: Compliance with certain new health care reform claims and appeals requirements will not be required until July 1, 2011. The requirements subject to this grace period relate to (i) 24-hour review of an initial urgent care claim (shortened from the current 72-hour review period); (ii) requirement to provide claims and appeals notices in a culturally and linguistically appropriate manner; (iii) requirement to include specific new information on adverse benefit determination communications, such as diagnosis and treatment codes and information about available external review processes; and (iv) deemed exhaustion of internal claims and appeals processes if there is not strict compliance with the new health care reform rules.
External Review of Adverse Benefits Decisions: The external review processes described in prior technical releases are safe harbors from enforcement by the regulators. Plans that do not strictly comply with the safe harbor may still be determined, based on the facts and circumstances, to comply with the external review requirements. For example, if a self-insured plan contracts with fewer than three independent review organizations (IROs), the plan may demonstrate other steps taken to ensure that its external review process is independent and without bias.
Grandfathered Plans: Insured group health plans will not immediately lose grandfathered status based on a change in the employer contribution rate if the insurance issuer and group health plan sponsor take certain steps to prevent changes to the employer contribution rate without the insurance issuer's knowledge. Group health plan sponsors with insured grandfathered plans should expect to be asked to make representations to their insurance issuers about contribution rates in effect on March 23, 2010, and at the time of contract renewal.
Compliance Assistance: The regulators will emphasize assisting employers and insurers with complying with the health care reform requirements rather than imposing penalties on plans and insurers working diligently and in good faith to come into compliance with the new laws.
The full guidance is available on the following websites:
Affordable Care Act Implementation FAQs:
U.S. Department of Labor Technical Release 2010-02:
For more information, in BNA's Tax Management Portfolios, see Kenty, 389 T.M., Medical Plans — COBRA, HIPAA, HRAs, HSAs and Disability, and in Tax Practice Series, see ¶5920, Health & Disability Plans.
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