Proposed Regulation on Exchange Eligibility (Part II)
On August 17, 2011, the Department of Health and Human Services (HHS) published a proposed regulation (the "Proposed Regulation") that clarifies the duties of Exchanges with respect to determining individual eligibility for qualified health plan (QHP) enrollment, federal premium tax credits and cost-sharing subsidies to help pay for QHP coverage, and certain government-sponsored health programs.
As noted in previous columns, the PPACA employer mandate penalty depends in part on whether an employer’s employees receive a premium tax credit for QHP coverage through an Exchange.
We answered certain frequently asked questions last week and continue with more questions this week.
How is the advance premium tax credit administered?
Advance payments of premium tax credits are made monthly to the issuer of the QHP in which the individual enrolls. An Exchange is responsible for providing several notifications that are critical to the administration of the advance premium tax credits and cost-sharing subsidies. Among other things, an Exchange will notify the health insurer issuing the applicable qualified health plan (QHP) of the applicant’s eligibility for federal premium tax credits or cost-sharing subsidies or a change in the level of payments for which the enrollee is eligible. An Exchange also will send eligibility and enrollment information to HHS so that it can begin, end or change the individual’s advance payments of premium tax credits or cost sharing subsidy level.
Will an exchange notify anemployer that one of its employees has qualified to receive an advance premium tax credit payment?
If the Exchange determines an individual is eligible for advance premium tax credits because the individual’s employer-sponsored coverage is not minimum essential coverage, is unaffordable or does not provide minimum value, the Exchange must notify the employer and identify the employee. The preamble states that future regulations will contain additional information regarding notices, including notices that an Exchange will send to an employer notifying it that an individual is eligible for advance payments of the premium tax credit or cost-sharing subsidies.
May an individual become ineligible for advance premium tax credits during a year if changes in status occur during the year?
Yes, the Proposed Regulationincludes rules regarding eligibility redeterminations during a year. In general, an Exchange must redetermine eligibility of an applicant if it receives and verifies new information reported by the applicant or through other means. Individuals generally are required to update certain information throughout the year. Exchanges must notify enrollees of any redetermination changes, and changes resulting from a redetermination generally are effective on the first day of the month following the date of the notice. Exchanges generally must require an enrollee to report certain changes within 30 days. AnExchange also must redetermine annually whether an individual is eligible to enroll in a QHP through the Exchange. Enrollment in a QHP generally will continue (provided the individual continues to be eligible) unless the enrollee takes action to change plans or terminate coverage.
Have the agencies issued guidance for small employers that want to offer employees health coverage through a small business health exchange beginning in 2014?
The Proposed Regulation and a proposed regulation on the establishment of Exchanges and QHPs published by HHS in July include general standards applicable to employers participating in the Small Business Health Options Program ("SHOP"). Among other things, the proposed regulations provide that –
- An employer with employees in more than one state may choose to enroll its employees in one or more plans through the SHOP serving the principal place of business or the SHOP serving the employee's worksite;
- A qualified employer will be responsible for informing employees about selecting and enrolling in a QHP through an Exchange;
- Qualified employers will submit premium payments to the Exchange;
- Qualified employers retain all notice responsibilities (e.g, COBRA notices) under state and federal law; and
- Qualified employers will continue to offer the same plan or plans or level of coverage selected for the previous year unless the employer takes action to change coverage or the previous options are no longer available.
Got a health-care reform question? You can ask YOUR health-care reform legislation question online at http://www.surveymonkey.com/s/second_opinions
You can find a handy list of Key Provisions of the Patient Protection and Affordable Care Act and their effective dates at http://www.groom.com/HCR-Chart.html.
Contributors:
Christy Tinnes is a Principal in the Health & Welfare Group of Groom Law Group in Washington, D.C. She is involved in all aspects of health and welfare plans, including ERISA, HIPAA portability, HIPAA privacy, COBRA, and Medicare. She represents employers designing health plans as well as insurers designing new products. Most recently, she has been extensively involved in the insurance market reform and employer mandate provisions of the health-care reform legislation.
Brigen Winters is a Principal at Groom Law Group, Chartered, where he co-chairs the firm's Policy and Legislation group. He counsels plan sponsors, insurers, and other financial institutions regarding health and welfare, executive compensation, and tax-qualified arrangements, and advises clients on legislative and regulatory matters, with a particular focus on the recently enacted health-reform legislation.
PLEASE NOTE: This feature is intended to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.