Employee Benefits Compliance, Individual Mandate, Laws, Regulations & FAQs

FAQs XIII: Expatriate Health Plans Exempt from ACA until 2016

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For plan years ending on or before December 15, 2015, expatriate health plans are not required to comply with the requirements of the Affordable Care Act (ACA), but must comply with the pre-Affordable Care Act version of Title XXVII of the Public Health Service (PHS) Act and other applicable law under ERISA and the Internal Revenue Code, including, for example, the mental health parity provisions, the HIPAA nondiscrimination provisions, the ERISA section 503 requirements for claims procedures, and any reporting and disclosure obligations under ERISA Part 1.  This transitional relief is granted by FAQs XIII, issued March 8 by the Departments with jurisdiction over implementation of the ACA (the DOL, HHS and IRS).

For purposes of this temporary transitional relief, an expatriate health plan is an insured group health plan that provides coverage for individuals who reside outside of their home country for at least six months of the plan year and any covered dependents.  (The definition of “expatriate health coverage” is at 45 CFR 153.400(a)(1)(iii).)

The FAQ also confirms that coverage provided under an expatriate group health plan is a form of “minimum essential coverage” under Internal Revenue Code section 5000A.  If an individual has minimum essential coverage, the individual will not be subject to the “Individual Mandate” tax.  Additionally, an employee who is offered “minimum essential coverage” by his/her employer will not be eligible for a subsidy in the Exchange if the employer coverage is “affordable” and provides “minimum value.” This means the employer will not be subject to a potential penalty under the “Employer Shared Responsibility” provisions of the ACA.

The FAQ cites several reasons for granting transitional relief for expatriate health plans:

  • It may be difficult or impossible for expatriate plan issuers to comply with all ACA requirements.  For example, independent review organizations may not exist abroad, and it may be difficult for certain preventive services to be provided, or even be identified as preventive, if different code sets are used by providers outside the US.
  • Expatriate issuers may face challenges and delays in communicating with enrollees living abroad, and it may be difficult to produce standardized benefits disclosures due to the complexities of expatriate plans.
  • Expatriate health plans may require additional regulatory approvals from foreign governments, and, in some circumstances, it is possible that domestic and foreign law requirements conflict.