Employee Benefits Compliance, Exchanges, Notices & Disclosures (Sample forms)

Government Issues ACA FAQs Part XVI on Exchange Notices and 90-Day Waiting Period Limit

On September 4, 2013, the federal government issued Frequently Asked Questions (FAQs) Part XVI, addressing two separate Affordable Care Act (ACA) topics: Exchange Notice distribution requirements, and the 90-day waiting period limitation. Specifically, the FAQ provides:

  1. It is permissible for another entity (such as an issuer, multiemployer plan, or third-party administrator) to send the Notice of Coverage Options (Exchange Notice) on behalf of an employer, but if the notice is only sent to enrolled employees, the employer remains liable to send the notice to all other employees.
  2. Plans and issuers can rely, at least through 2014, on the March 2013 proposed rules on the 90-day waiting period limitation. The Departments will be issuing final regulations but the FAQ does not specify when.

FAQs are prepared jointly by the Departments of Labor, Health and Human Services (HHS), and the Treasury (collectively, the Departments). These and previously issued FAQs are available at http://www.dol.gov/ebsa/healthreform/  and http://www.cms.gov/cciio/resources/fact-sheets-and-faqs/index.html

FAQ #1 on Notice of Coverage Options Available Through the Exchanges

The FAQs provide that “an employer will have satisfied its obligation (under FLSA 18B) to provide the notice with respect to an individual if another party provides a timely and complete notice”. Examples of such other party would be insurance companies, third party administrators and multiemployer plans. If the other party does not provide timely and complete notice to all the employer’s employees, the employer is obligated to provide the Exchange Notice to those other employees. For example, if an insurer or third party administrator provides the Exchange Notice only to employees who are actually enrolled in the plan, the employer must provide the Notice to employees who are not eligible or who are eligible but not enrolled.

A third party who provides notices on behalf of employers should either:

  1. ensure that a notice is provided to all employees regardless of plan enrollment, or
  2. clearly notify the employers that the notice is only being provided to a subset of employees (e.g., employees enrolled in the plan) and advise employers that they are obligated to notify all other employees (e.g., employees who are not enrolled in the plan).

FAQ #2 on the 90-day Waiting Period Limitation

The FAQ seems to reiterate information already provided in prior guidance on the 90-day waiting period limitation (under PHS Act section 2708).   Plans and issuers can rely on guidance provided in the March 2013 proposed rules at least through 2014. The Departments will be issuing final regulations at some undisclosed future date.  To the extent final regulations are more restrictive on plans or issuers than the proposed regulations, they will not be effective prior to January 1, 2015, and plans and issuers will have sufficient time to comply.

The FAQ also reiterates that the proposed regulations generally provide that a group health plan or health insurance issuer offering group health insurance coverage may not impose a waiting period that exceeds 90 days, if eligibility is based solely on the lapse of time.  This applies for employees who are otherwise eligible to enroll.  Being “otherwise eligible to enroll” in a plan generally means having met the plan’s substantive eligibility conditions (such as being in an eligible job classification or achieving job-related licensure requirements specified in the plan’s terms).  To the extent plans and issuers impose substantive eligibility requirements not based solely on the lapse of time, these eligibility provisions are permitted even if they keep an individual out of the plan for more than 90 days, so long as they are not designed to avoid compliance with the 90-day waiting period limitation.