HIPAA certificates no longer needed due to ACA

Starting January 1, 2015, medical plans will no longer be required to provide Certificates of Creditable Coverage (COCCs) under the Health Insurance Portability and Accountability Act (HIPAA). As a result, medical insurers will stop producing and sending COCCs as of the 1^st of the year.

These certificates, also sometimes referred to as ‘HIPAA Certificates’ served to show that a person had previous creditable coverage in order to reduce pre-existing restrictions; since the Affordable Care Act (ACA) prohibits the use of pre-existing condition clauses for most types of coverage in plans renewed or initiated in 2014, on 2/14/14 the Treasury, the Department of Labor, and the Department of Health and Human Services jointly issued final regulations that eliminated the requirement for plan sponsors to issue the certificates after December 31, 2014.

Qualifying event documentation

While COCCs served as proof of previous coverage for members with pre-existing conditions, they were not intended as supporting documentation of qualifying events and did not document the reason for policy termination.  It is the plan sponsors' responsibility to apply their eligibility rules with respect to qualifying events, and they typically require the prospective member to supply documentation proving the event occurred.

Documentation for qualifying events varies.  Below are a few examples of what may be considered appropriate documents:

Qualifying event	Document examples
Adding a dependent	Birth certificate, adoption agreement
Change in employment	Termination letter from employer
Loss of coverage through spouse	Letter from spouse’s employer
Loss of coverage under COBRA, Continuation	Letter from former employer
Marital status change	Marriage certificate, divorce certificate

Employer Shared Responsibility Relief under the Affordable Care Act (ACA)

Employers with less than 100 full-time equivalent employees (FTEs) but more than 50 FTEs will not subject to Employer Shared Responsibility until January 1, 2016 if they can complete a certification process to demonstrate that, during the period between February 9, 2014 and December 31, 2014, the employer did not:

• Reduce the size of its workforce or the hours of service for employees in order to satisfy the workforce size condition
• Change the renewal date
• Reduce employer contribution by more than 5% for employee only coverage that was in place on February 9, 2014 through December 31, 2015 for calendar year plans and February 9, 2014 until the 2015 renewal date for non-calendar year plans
• Eliminate a class being offered coverage
• Reduce coverage since February 9, 2014 that results in less than minimum value being offered

Note: Employers may establish a six consecutive month period in 2014 to count employees to determine if the mandate applies for the subsequent year. 

Employers in their first year as a large employer will not need to have a compliant plan in place for all employees by January 1. The employer will not be subject to penalties for the first three months of the year if such an employer establishes a compliant plan and offers it to all eligible employees by April 1^st.

For more information, see the US Treasury Department Fact Sheet summarizing recent updates to the Employer Shared Responsibility Payment under the ACA.

Federal Subsidies Under the Affordable Care Act

On 7/22, the D.C. Circuit Court ruled that the Internal Revenue Service (IRS) lacked the authority to allow tax credits under the Affordable Care Act (ACA) to be provided in the Obamacare ‘exchanges’ (‘Marketplaces’) that are not run by states. Later that day, however, a Virginia District Court panel hearing a similar case upheld the IRS' authority and protected the tax credits.

The outcome could have serious implications for states like New Jersey, which is one of 36 states that has a Federally managed exchange (vs state-based) online marketplace at HealthCare.gov for consumers to apply for medical coverage and government subsidies to pay for such coverage.

So what does this all mean?

·       The way the law is written, it is a bit vague about what constitutes a “state”exchange. One interpretation says funds can only run to exchanges that have been established by the states; another says the funds go to all the exchanges “serving” the states.

·       It would need to be determined if the states that choose not to run their own exchange (but to instead have the federal government to run it for them) intended for their enrollees to have or not to have access to subsidies to pay for their care. At this point it is assumed that states did want their enrollees to still get subsidies under the law, but just did not want to build the infrastructure to have their own state-based exchanges

·       The Obama Administration has already indicated they will appeal the DC ruling, as the subsidies are critical in implementation of the law, as the law mandates people to have health insurance and with lower-income folks, it would mean they have to  spend half of their income or more to abide by the law if the subsidies were not available.

·       At this time, the ruling does not mean the 36 states with federally-run exchanges need to do anything; the final ruling will determine the next steps. If the ruling is upheld, these states will not be able to create the infrastructure that has already been built and is operating/working and has insured hundreds of thousands of individuals; instead, it would likely need to be determined how states can legally contract with healthcare.gov the government, or external contractors to be able to provide subsidies vs. allowing all of those subsidies to lose them which in turn would disrupt the entire health insurance market.

Workplace Wellness Programs under the Affordable Care Act

The Affordable Care Act (ACA) includes several reforms directed at promoting and improving the effectiveness of workplace wellness programs. The Department of Health and Human Services (HHS), Employee Benefits Security Administration (EBSA) and Internal Revenue Service (IRS) collectively published final regulations on the ACA’s nondiscrimination requirements for workplace wellness programs which apply to both grandfathered and non-grandfathered group health plans for plan years beginning on or after Jan. 1, 2014.

The final regulations formally adopt nondiscrimination rules for health-contingent wellness programs, such as the reasonable design requirement and the reasonable alternative standards they must offer in order to avoid prohibited discrimination. A health-contingent wellness program is a program that requires an individual to satisfy a standard related to a health factor to obtain a reward. The final regulations divide health-contingent wellness programs into two categories:

• Activity-only wellness programs require an individual to perform or complete an activity related to a health factor in order to obtain a reward (for example, walking, diet or exercise programs).
• Outcome-based wellness programs require an individual to attain or maintain a certain health outcome in order to obtain a reward (for example, attaining certain results on biometric screenings or meeting exercise targets).

Additionally, the final regulations increase the maximum permissible reward under a health-contingent wellness program offered in connection with a group health plan (and any related health insurance coverage) from 20% percent to 30% of the cost of coverage. The maximum reward is further increased to 50% of the cost of health coverage for health-contingent wellness programs designed to prevent or reduce tobacco use.

Lastly, the ACA created a $200 million grant program for implementing comprehensive workplace wellness initiatives for 2011 through 2015. Under the program, grants will be available to eligible employers who provide their employees with access to a new workplace wellness program. Eligible employers include businesses that:

• Employ fewer than 100 employees who work 25 hours or more per week; and
• Did not have a workplace wellness program as of March 23, 2010, the date of the ACA’s enactment.

To be eligible for the grants, the wellness programs must be made available to all employees. In addition, the workplace wellness program must include:

• Criteria related to health awareness, including health education, preventive screenings and health risk assessments;
• Efforts to maximize employee engagement;
• Initiatives to change unhealthy behaviors and lifestyle choices; and
• A supportive environment at the workplace, including workplace policies to promote healthy eating, increased physical activity and improved mental health.

HHS is responsible for developing specific criteria for the grant program and application process. However, this guidance has not yet been issued.

The ACA authorized the Centers for Disease Control (CDC) to provide employers of any size with access to technical assistance, consultation, resources and other tools to help evaluate, analyze and monitor their wellness programs. The CDC was also directed to conduct a national worksite survey to assess employment-based health programs. Information on workplace health promotion is available on the CDC website.

90-Day Waiting Period Limitation Final Rule Released

The Department of the Treasury has released a final rule on the 90-day waiting period limitation applicable to all group health plans, including self-funded plans, issued for plan years beginning on or after January 1, 2015.

The final rule clarifies that the maximum allowed length of any new hire benefit waiting period is 90 days and the maximum allowed length of any reasonable and bona-fide employment-based orientation period cannot exceed 30 days. All calendar days (including weekends and holidays) are counted.

The ruling further states that being otherwise eligible to enroll in a plan means having met the plan’s “substantive eligibility conditions” including: being in an eligible job classification, achieving job-related licensure requirements or satisfying a reasonable and bona-fide employment based orientation period. The plan may still impose other substantive eligibility criteria, but it may not impose conditions for the sake of passing time only.

The final regulation will go into effect on August 15, 2014.