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Final HHS Rules Address Exchange and Insurance Standards, Including Option to Delay Employee Choice in SHOPs and Requirements for Enrollment Periods

May 23, 2014

PPACA; Exchange and Insurance Market Standards for 2015 and Beyond, 45 CFR Parts 144, 146, 147, 148, 153, 155, 156, and 158, 79 Fed. Reg. __ (May 27, 2014); Fact Sheet: Exchange and Insurance Market Standards for 2015 and Beyond

Regulations

Fact sheet

Visit the Health Care Reform Community on Checkpoint to join the discussion on this development (for Checkpoint subscribers to EBIA’s Health Care Reform manual).

HHS has finalized regulations covering a variety of issues related to Exchanges and to insurance market reforms for 2015 and later years. Most of the rules have been finalized as proposed (see our article). Here are highlights:

 

  • SHOP Elections and Employee Choice. The rules align the start dates for the federally facilitated Small Business Health Options Program (FF-SHOP) annual election periods with the open enrollment period in the individual market federally facilitated Exchanges—for 2015 both will open on November 15, 2014. State-based SHOPs can start annual enrollment earlier. The rules also eliminate the 30-day minimum period during which employers and employees may select a plan through SHOP, giving states flexibility to establish their own periods. In addition, states may request that their SHOP delay the employee choice option for 2015 if employee choice would likely cause higher premiums. [EBIA Comment: Mandatory implementation of the SHOP employee choice option, which gives employees a choice among all qualified health plans (QHPs) at the metal level chosen by the employer (bronze, silver, gold, or platinum), had already been delayed a year, that is, for plan years beginning before January 1, 2015. (See our article.) The preamble states that HHS is committed to implementing employee choice in all SHOPs by 2016.]
  • Special Enrollment Periods. The regulations finalize changes to Exchange special enrollment periods, including a requirement that individuals be permitted to select a QHP up to 60 days before and after a loss of minimum essential coverage. [EBIA Comment: The 60-day rule reflects continued concern about coordinating the timing of COBRA notices and elections with Exchange coverage to avoid coverage gaps for individuals losing eligibility under an employer-sponsored plan (see our article).]
  • Exchange Navigators and Other Assistance Personnel. Although states generally may pass laws to regulate Exchange Navigators and other Exchange assistance personnel (for instance, by imposing fingerprinting and background check requirements that do not prevent implementation of the federal Navigator program), the final regulations set forth a non-exhaustive list of requirements that states generally may not impose. For instance, states may not require Navigators to be agents or brokers or require them to refer individuals to agents and brokers who are not required to provide “fair, accurate, and impartial information.” The regulations also establish civil penalties for Exchange Navigators and assistance personnel of up to $100 a day for failure to comply with federal standards. [EBIA Comment: A number of modifications were made to the complex proposals for Navigators. Anyone following the regulation of Navigators and other Exchange assistance personnel should review these provisions carefully.]
  • Guaranteed-Renewability Guidance. Under the guaranteed-renewability rules, insurers generally must renew coverage at the option of the policyholder, but they may modify the coverage at the time of renewal so long as, in the individual and small group markets, the modification is effective uniformly. Alternatively, insurers may discontinue a product under certain circumstances. The final regulations generally adopt the criteria set forth in the proposed regulations to determine whether a “uniform modification of coverage” has occurred or whether an existing product has been discontinued and a new product offered. For example, benefit changes that increase or decrease the premium for any plan by more than 2% would be considered a new product offering, not a modification. [EBIA Comment: It is important to distinguish between modifying and discontinuing a product—a policyholder has the guaranteed right to renew a modified policy, but if the product is discontinued, a policyholder generally has the right to purchase on a guaranteed-availability basis any other health insurance coverage offered by the same insurer in the applicable market. Also, the notices that insurers must send are different for renewals and for terminations.]
  • Fixed Indemnity Insurance. Consistent with previous guidance (see our article), the final regulations amend the criteria for fixed indemnity insurance to be treated as an excepted benefit in the individual market by eliminating the requirement that benefits be paid on a per-period basis (i.e., allowing payment on a per-service basis), and, among other conditions, requiring (on a prospective basis) that it be sold only to individuals who attest that they have other health coverage that is minimum essential coverage. [EBIA Comment: The regulations do not address group fixed indemnity policies.]

 

EBIA Comment: This guidance finalizes a wide range of proposals, including modifications to the group health plan mandate opt-out for certain self-insured non-federal governmental health plans. They also finalize, with some changes, rules for allocating funds for the premium stabilization programs. And, completing some housekeeping, they remove HIPAA’s guaranteed-availability rules for the individual market to the extent they have been superseded by health care reform’s more expansive provisions. For more information, see EBIA’s Health Care Reform manual at Sections V.F (“Excepted Benefits: Certain Health FSAs, Dental, Vision, and Others”), XIV.B (“Guaranteed-Availability and Guaranteed-Renewability Rules”), XX (“Mechanisms to Allocate Risk”), and XXI (“Exchanges, Qualified Health Plans (QHPs), and CO-OPs”). See also EBIA’s HIPAA Portability, Privacy & Security manual at Sections VI.F (“Excepted Benefits: Certain Health FSAs, Dental, Vision, and Others”), XVIII (“Guaranteed-Availability and Guaranteed-Renewability Rules for Large Group, Small Group, and Bona Fide Association Plans”), and XIX (“Guaranteed-Availability and Guaranteed-Renewability Rules in the Individual Market”), and EBIA’s Group Health Plan Mandates manual at Section IV.F (“Governmental Employers”).

Contributing Editors: EBIA Staff.

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