The summary of benefits and coverage (SBC), maximum out-of-pocket limits (MOOPs), and a rule on “nondiscrimination in health programs” were among the problem areas most frequently cited by employer groups in suggesting administrative changes to Affordable Care Act (ACA) implementation.
These written comments were submitted July 12 in response to a June 12 notice (82 Fed. Reg. 26885) from the U.S. Department of Health and Human Services (HHS), which sought input on how to reduce the ACA’s economic and regulatory burdens.
Summary of Benefits and Coverage
The requirement to furnish an SBC annually to health plan enrollees is costly and duplicative of the substantial information that plan sponsors already were providing in communications like the summary plan description (SPD), according to the U.S. Chamber of Commerce.
“The SBC’s rigid format imposes wording and formatting rules that are confusing and often misleading to employees,” the Chamber added. “The format fails to reflect the highly customized benefits common in large employer and union health programs.”
The Chamber encouraged HHS to provide a safe harbor from the SBC requirement for employers that already provide the SPD and other summary materials required by the Employee Retirement Income Security Act (ERISA).
‘Embedded’ Out-of-Pocket Limits
Another recurring complaint involved the HHS’ requirement, stated in 2015 guidance, that the ACA’s MOOP for self-only coverage ($7,150 in 2017) apply separately to each individual enrolled in family coverage (along with the $14,300 limit for the family as a whole).
“This results in more of an individual’s costs being borne by all plan participants, contrary to the ACA’s intent, and raising costs for everyone,” according to the ERISA Industry Committee. “HHS should end this embedded MOOP requirement, and instead allow plans the flexibility to choose whether to embed or not.”
The American Benefits Council (ABC) agreed. “This requirement has restricted employer flexibility in structuring cost-sharing in employer health plans, which can be to the detriment of employees,” the ABC stated. “For example, mandated embedded MOOPs can result in a plan increasing deductibles in order to offset the embedded MOOP mandate.”
In May 2016, the HHS issued a rule to apply ACA Section 1557, which prohibits discrimination in federally funded “health programs and activities.” According to the employer commenters, however, the agency extended the reach of this provision much too far, imposing burdensome notice requirements on plan sponsors and administrators outside the reach of federal aid.
“While the Chamber supports the goals of Section 1557, the final rule is not only excessive in scope and application but is also burdensome with regard to the mandated frequency and length of the notice,” according to the Chamber’s comments.
The rules should apply only when there is “a direct nexus between the employer-sponsored health plan or coverage and the receipt of federal funds,” the Chamber maintained. “A Third Party Administrator (TPA) should not considered a covered entity ‘by association’ merely because it is operated by an entity that offers an insurance product in the exchange.”
The HHS also should exclude “employer group waiver plans” (EGWPs) that sponsor retiree drug coverage under the Medicare Part D rules, according to the ABC. Applying Section 1557 to these plans “creates disincentives for establishing and maintaining EGWPs, with the downstream result that American retirees and their families could be left without coverage upon which they have otherwise cone to depend,” the ABC explained.
Regarding the notice requirement itself, “we are wasting time and money sending out ‘taglines’ in 15 different languages with every ‘significant’ communication,” ERIC stated. The HHS should require the notice only on an annual basis, “and replace the tagline with a simple visual that can direct individuals to language assistance.”
Other recommendations by the ABC, ERIC, and the Chamber included:
- Facilitating the electronic transmission of required disclosures;
- Removing the uncertainty about cost-sharing reduction funding;
- Expanding the set of “excepted benefits” and permissible short-term coverage;
- Making it easier for “grandfathered” plans to stay that way;
- Reducing the employer reporting burdens under Sections 6055 and 6056;
- Clarifying that health reimbursement arrangements are not group health plans; and
- Harmonizing the conflicting rules on employee wellness programs.
| David A. Slaughter, JD, is a Senior Legal Editor for BLR’s Thompson HR products, focusing on benefits compliance. Before coming to BLR, he served as editor of Thompson Information Services’ (TIS) HIPAA guides, along with other writing and editing duties related to TIS’ HR/benefits offerings. Mr. Slaughter received his law degree from the University of Virginia and his B.A. from Dartmouth College. He is an associate member of the Virginia State Bar.
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