Employee Benefits-FAQs Issued For Affordable Care and Mental Health Parity Acts

The Departments of Health and Human Services (“HHS”), Labor and the Treasury (the “Departments”) have issued new FAQs for the Affordable Care Act, the Mental Health Parity Act and some other matters. FAQs on the Affordable Care Act were previously issued on September 20, 2010, October 8, 2010, October 12, 2010, and October 29, 2010. Further FAQs on the Acts are anticipated. Some points and highlights pertaining to the Affordable Care Act (Mental Health Parity and other matters later):

Recommended Preventive Services. The Affordable Care Act generally requires group health plans, other than grandfathered plans, to provide coverage for recommended preventive services without cost sharing. A complete list of the current recommended preventive services is available at www.healthcare.gov/center/regulations/prevention.html.

Copayments. A group health plan, which does not impose a copayment for colorectal cancer preventive services performed in an in-network ambulatory surgery center, may nevertheless require a $250 co-payment for this service when performed at an in-network outpatient hospital. Plans may use reasonable medical management techniques to steer patients towards a particular high-value setting. Further, a group health plan may charge a copayment for physician visits, which do not constitute preventive services, to individuals age 19 and over (including employees, spouses, and dependent children), but may waive this charge for those under age 19. While dependent coverage of children cannot vary based on age (except for children who are age 26 or older), the plan can make distinctions based upon age that apply to all coverage under the plan, including coverage for employees, spouses and dependent children.

Automatic Enrollment. The Affordable Care Act requires employers, with more than 200 full-time employees, to automatically enroll new full-time employees in the employer’s group health plan, and to continue enrollment of current employees. However, this requirement will not apply until the Department of Labor issues regulations on this topic, probably in 2014.

Notice of Material Modifications. The Affordable Care Act requires a group health plan to provide a 60-day prior notice for material modifications to the plan or coverage. However, the plan is not required to provide this notice, until the Department of Labor issues certain standards for the summary of benefits and coverage explanation also required by the Act.

Grandfathered Status. A group health plan provides out-of-pocket spending limits that are based on a formula (a fixed percentage of an employee’s prior year pay). If the formula stays the same, but a change in pay results in an increase in the out-of-pocket limit which exceeds the thresholds allowed under paragraph (g)(1) of the interim final regulations relating to grandfathered health plans, the plan will not lose its grandfathered status. When a plan has a fixed-amount cost-sharing arrangement other than a copayment (for example, a deductible or out-of-pocket limit), which is based on a percentage-of-pay formula, that arrangement will not cause the plan or coverage to lose its grandfathered status, so long as the formula remains the same as it was on March 23, 2010. Accordingly, the mere change in pay does not cause a loss of grandfathered status.