In King v. Blue Cross and Blue Shield of Illinois, Case No.: 3:13-CV-1254-CAB-JMA (S.D. Cal. 2015), the court held that the benefits payable under a self-insured health care plan, which covers only retirees, are not subject to the lifetime limit on essential health benefits under the Affordable Care Act. How did the district court reach this conclusion?
The court said that the issue in this case involves an understanding of the interplay between the Public Health Service Act (“PHSA”), ERISA, and the Affordable Care Act. The court noted that, among its many other provisions, the Affordable Care Act amended the PHSA to ban lifetime limits on the dollar value of benefits for any group health participant or beneficiary. 42 U.S.C. § 300gg-11(a)(1). At the same time, the Affordable Care Act added a provision to ERISA stating that the requirements of the PHSA (as amended by the PPACA), which includes the lifetime limit ban, shall apply to group health plans. ERISA § 715(a)(1). However, Section 732 of ERISA, which pre-dates the Affordable Care Act, generally states that the requirements of this part (which includes § 715(a)(1)) does not apply to any group health plan for any plan year if, on the first day of such plan year, such plan has less than 2 participants who are current employees (the “Retiree Plan Exception”).
The court reviewed and discussed the interaction among these and other provisions of the acts in question. The court concluded, and therefore ruled, that the Retiree Plan Exception exempts employer plans covering only retirees (and therefore fewer than two participants who are current employees) from the coverage mandates of the Affordable Care Act, including the amendments thereto by the Affordable Care Act such as the lifetime limit on essential health benefits.