Most PPACA Provisions for Expatriate Plans Delayed Until 2015
March 19, 2013
On March 8, 2013, the Departments of Labor, Health and Human Services and Treasury issued a Frequently Asked Question (FAQ) announcing that compliance with most Patient Protection and Affordable Care Act (PPACA) provisions is being delayed for expatriate plans meeting this definition:
Insured group health plans with plan years ending on or before December 31, 2015, in which enrollment is limited to individuals residing outside of their home country for at least six months of the plan year and any covered dependents.
This delay impacts most PPACA provisions, including the prohibition on discrimination in favor of highly compensated individuals, the Summary of Benefits and Coverage, and guaranteed renewal of expatriate coverage even when an individual is no longer an expatriate.
The Departments noted above implemented this delay to allow time to gather further information and analyze the unique challenges identified by the industry that PPACA presents to these expatriate plans.
Additional clarifications, per the expatriate plan definition above, included:
- Expatriate coverage is exempt from the Reinsurance Assessment during this delay period. IMPORTANT: This is a change since our March 8 news alert about the Reinsurance Assessment, which reflected our understanding at the time.
- All federal requirements that were in place before PPACA became law, including Mental Health Parity, the Health Insurance Portability and Accountability Act (HIPAA) and ERISA, will continue to apply to expatriate plans.
- Expatriate coverage will qualify as minimum essential coverage for purposes of the individual mandate. Participants will not be subject to penalties during the delay period.
Areas Requiring Further Clarification
There are a few areas for which we expect there will be additional guidance or clarification.
Fees and Taxes
The FAQ did not address how the Health Insurance Industry Fee will be applied, if at all, to expatriate plans. As a result, premiums will continue to be impacted by this tax unless we receive further clarification indicating otherwise.
The FAQ also didn’t address the Comparative Effectiveness Research Fee (CERF). Unless we receive further clarification, we will maintain our current position that CERF does not apply to expatriate plans provided primarily for employees who work and reside outside the United States.
Definition of Expatriate
Clarification is needed regarding:
- Plans with key local nationals (e.g. a non-U.S. citizen working in their country of citizenship) as it is unclear whether or not these plans qualify as expatriate plans under these rules
- Individuals who are outside their home country for at least six months of the plan year, versus at least six months in general (not specific to the plan year)
- Whether or not “insured plans” include self-insured plans
We will keep you updated as further guidance or clarification is provided.
Opportunity for Feedback
Brokers, clients and others interested in providing feedback to the above-mentioned Departments regarding the challenges that PPACA provisions present to expatriate health plans may do so by May 8, 2013. Feedback may be sent to: firstname.lastname@example.org.
Read the FAQ
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