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January 8, 2015

HRB 105 - Expatriate Plans Exempt from ACA; 2) Proposed SBC Changes; 3) Updated County Chart for Use in Language-Specific Plan Communications; 4) Excepted Wrap-Around Coverage; and 5) Taxpayer Assistance for Individuals (article)

Released January 8, 2015 I Download as a PDF

HRB 105 - Expatriate Plans Exempt from ACA; 2) Proposed SBC Changes; 3) Updated County Chart for Use in Language-Specific Plan Communications; 4) Excepted Wrap-Around Coverage; and 5) Taxpayer Assistance for Individuals (article)

Expatriate Plans Exempt from ACA

On December 16, 2014, President Obama signed into law, the Expatriate Health Coverage Clarification Act of 2014, as part of the Consolidated and Further Continuing Appropriations Act 2015 (H.R. 83; now Public Law 113-235). This law makes expatriate health plans exempt from certain Affordable Care Act (ACA) mandates applicable to group health plans; and apply to both insured and self-funded expatriate plans issued or renewed on or after July 1, 2015.  Guidance issued last year by the Department of Labor provided transitional relief for certain insured expatriate plans for purposes of ACA compliance (see CBIZ Health Reform Bulletin, Applicability of ACA to Expatriate Group Health Coverage, 3/12/13). 

The new law clarifies that in order for the exemption to apply, the expatriate plan must meet certain criteria as to eligibility including dependent coverage, the types of covered benefits and services, and the ability to meet the minimum essential coverage standards.  Specifically, a ‘qualified expatriate plan’ must meet all of the following criteria:

1.    The individuals enrolled in the plan must be qualified expatriates.  Qualified expatriates include:

w  Individuals on a temporary transfer or work assignment in the U.S. as required by their employer and who require access to health insurance in multiple countries;

w  Individuals working outside the U.S. for a minimum of 180 days in a consecutive 12 month period in which the plan year overlaps; and

w  Non-profit groups (charitable workers) who travel or re-locate globally and who require access to health insurance in multiple countries.

Individuals who are not U. S. nationals and reside in the country of which they are citizens would not be eligible to participate in the plan;

2.    Substantially all of the benefits provided under the plan or coverage are not HIPAA-excepted benefit plans such as limited benefit plans or limited scope dental and vision plans provided under separate policy or contract, or non-coordinated benefits;

3.    The plan covers certain inpatient hospital services, outpatient facility services, physician services, and emergency services, depending on the nature of the covered individuals.  For example, medical services must be available to employees who require access to such services in multiple countries;

4.    The benefits provided under the expatriate health plan satisfy the minimum essential coverage standard;

5.    If the plan or coverage provides dependent coverage of children, it must make such dependent coverage available for adult children until age 26;

6.    The plan’s insurer or administrator is licensed to sell insurance in more than two countries and offers reimbursement for items or services under the plan in the local currency in eight or more countries, as well as maintain call centers and claim processing centers in those countries; and

7.    The plan or coverage, and the plan sponsor or insurer has been in compliance with the federal laws governing plan compliance prior to the enactment of ACA, such as federal mental health parity provisions, the ERISA claims and appeal procedures, the HIPAA non-discrimination provisions, and any reporting and disclosure obligations under ERISA.

A plan that meets the qualification requirements above would be exempt from most of the ACA mandates including many of the insurance market reforms, as well as exempt from the Patient Centered Outcome Research fees, reinsurance contributions and the annual health insurer provider fees.  While these plans may be exempt from certain ACA mandates, expatriate plans remain subject to the IRC Section 4980I “Cadillac” tax.  Further, these plans qualify as MEC for purposes of IRC Section 6055 and 6056 reporting purposes.  With regard to the Section 6056 benefit statement disclosures, these can be provided electronically to covered individuals unless the individual explicitly refuses electronic distribution.


Proposed Changes for Summary of Benefits and Coverage

On December 22, 2014, the ACA’s governing agencies (HHS, IRS and DOL) released proposed changes to the Summary of Benefits and Coverage (SBC) template and related documents.   In the proposed template, the agencies removed some obsolete language, clarified certain text relating to continuation of coverage, minimum essential coverage, and minimum value, and make changes to the overall SBC format.  In addition, these regulations would add a third cost example relating to coverage for a simple fracture treated in an emergency room. 


The proposed SBC template, together with instructions and related glossary are available for viewing on both the DOL and HHS websites:  

w  Summary of Benefits and Coverage (SBC) Template | MS Word Format

w  Instructions for Completing the SBC - Group Health Plan Coverage

w  Uniform Glossary of Coverage and Medical Terms


Comments on these regulations are due by March 2, 2015.  If finalized, changes to the SBC content and related materials would apply on the first day of the first open enrollment period beginning on or after September 1, 2015.  For individuals enrolling outside the open enrollment period, the content changes would apply on the first day of the first plan year beginning on or after September 1, 2015.


Use of Specific Language in Plan Communications - Updated County Chart

As a reminder, the ACA requires certain plan communications to be provided to individuals in a culturally and linguistically appropriate manner.  This means that individuals residing in a particular county where 10% or more of its population are literate in a non-English language must be provided the SBC and glossary in the appropriate non-English language.  This rule is similar to the language requirements applicable to internal claims and appeals and external review disclosures.  The CMS’ Center for Consumer Information & Insurance Oversight annually updates the list of counties in which language translations would be appropriate, based on geographic population shifts as reported by the Census Bureau.  The updated data county chart is available here.

Proposed Amendments to Wraparound Coverage

On December 23, 2014, the ACA’s governing agencies published another round of proposed regulations relating to excepted benefits as it would apply to wraparound coverage.  As background, certain excepted benefit plans are generally exempt from both HIPAA, as well as the ACA (see CBIZ Health Reform Bulletin, Excepted Benefit Proposed Regulations, 1/6/14). 


These regulations propose a pilot project that would begin at the end of 2017 and run for three years.  It would allow wrap-around coverage in two very specific circumstances: one could be made available to part-time employees as long as the employer offers adequate and affordable coverage to at least 95% of its full-time employees; the second relates to coverage offered through the multi-state marketplace plans.  In both instances, several other criteria must be met.  Comments on these proposed regulations are due by January 22, 2015.


Taxpayer Assistance for Individuals

As a reminder, the ACA requires virtually all individuals lawfully present in the United States to maintain minimum essential coverage (MEC) or pay a tax.  To this end, the IRS has several documents available to assist individual taxpayers.  While this isn’t specifically relevant to employers, it might be useful to know what individual taxpayers are required to have in order to prove MEC, obtain an exemption, or pay a tax.

w  Health Care Law: What’s New for Individuals & Families (Publication 5187)

w  Facts about making a shared responsibility payment (Publication 5185) English | Spanish

w  Facts about Health Coverage Exemptions (Publication 5172) English | Spanish.  This Fact Sheet discusses the Form 8965 that is used to report a coverage exemption granted by the Marketplace and filed with the taxpayer’s federal income tax return.

w  Facts about the Individual Shared Responsibility Provision (Publication 5156) English | Spanish

w  Affordable Care Act & Taxes - At a Glance

w  Questions and Answers on the Individual Shared Responsibility Provision

w  Chart for determining whether an individual has MEC

w  Information and FAQs about the Premium Tax Credit

w  Reporting and Calculating the Payment


Individuals obtaining coverage through the Marketplace and seeking a premium tax credit could expect to receive the Form 1095-A by January 31, 2015.  This form is furnished to individuals by the Marketplace to allow them to claim the premium tax credit, and to reconcile the credit on their returns with advance payments of the premium tax credit.  If an individual fails to receive the Form 1095-A, the IRS provides contact information for all Marketplaces to assist them in requesting the form.


About the Author:  Karen R. McLeese is Vice President of Employee Benefit Regulatory Affairs for CBIZ Benefits & Insurance Services, Inc., a division of CBIZ, Inc.  She serves as in-house counsel, with particular emphasis on monitoring and interpreting state and federal employee benefits law.  Ms. McLeese is based in the CBIZ Leawood, Kansas office.

The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained herein is provided as general guidance and may be affected by changes in law or regulation. The information contained herein is not intended to replace or substitute for accounting or other professional advice. Attorneys or tax advisors must be consulted for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.  

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