Editor’s note: A December 24 update appears at the end of this post.

As we reach the end of what has been a very long, exhausting, year for health care reform, one would have hoped that the pace of implementation might slow a little for the holidays.  No such luck.  December 20 ended the week before Christmas with a number of Affordable Care Act developments.

Today, December 23, CMS again extended the deadline for signing up for qualified health plan coverage through the federal exchange for coverage effective January 1, 2014, this time for one day until the end of the day December 24.  Julie Bataille released a statement on December 23, saying:

The deadline for signing up for coverage to start January 1 is today [December 23]. We recognize that many have chosen to make their final decisions on today’s deadline and we are committed to making sure they can do so. Anticipating high demand and the fact that consumers may be enrolling from multiple time zones, we have taken steps to make sure that those who select a plan through tomorrow will get coverage for Jan 1.

CMS had said in the preface to its emergency rule extending January 1 enrollment until December 23, 2013,  that it would consider a further deadline delay under “exceptional circumstances.”  Apparently CMS considered the press of last minute enrollments on the 23rd to constitute such circumstances.  This will, however, further complicate the task of insurers attempting to make enrollments effective by January 1.

(CMS clarified in a statement released later on December 23 that it is not exactly extending the deadline for enrollment for January 1, 2014 coverage to December 24, but rather providing a “fail safe” for consumers who apply on December 23 but are unable to get through the enrollment process.  CMS is urging applicants to enroll on December 23 and not to delay until December 24.  As of 2:00 p.m. on the 23rd, 850,000 people had visited healthcare.gov.)

Obama Press Conference

On the 20th, President Obama held a press conference that focused in part on health reform issues.   The President announced that:

more than half a million Americans have enrolled through healthcare.gov in the first three weeks of December alone. In California, for example, a state operating its own marketplace, more than 15,000 Americans are enrolling every single day. And in the federal website, tens of thousands are enrolling every single day. Since October 1st, more than 1 million Americans have selected new health insurance plans through the federal and state marketplaces.

In the question and answer period that followed, the President vigorously defended the law, acknowledging that implementation had been “messy”:

The basic structure of that law is working, despite all the problems. Despite the  problems, despite the messaging problems, despite all that, it’s working. And again, you don’t have to take my word for it. We’ve got a couple million people who are going to have health insurance just in the first three months, despite the fact that probably the first month and a half was lost because of problems with the website and about as bad a bunch of publicity as you could imagine .

Medicaid And CHIP Applications

Second, The Centers for Medicare and Medicaid Services posted on December 20, 2013, the November Medicaid and CHIP Monthly Applications and Eligibility Determinations Report.  CMS reports that 4.2 million Medicaid and CHIP applications were received between October 1 and November 30, 2013, and 3.9 million were determined eligible for Medicaid.  This does not apparently include those determined eligible through the federal exchange — another 270,000.  Reported applications were down in November from October, but this is due at least in part to the partial nature of the November data.

Individual Mandate Exemption Forms

Third, CMS posted at the healthcare.gov website the forms needed to apply for exemptions from the individual responsibility requirement.  An applicant for an exemption based on affordability, membership in a health care sharing ministry, membership in a federally recognized Indian tribe, or incarceration can either claim the exemption on the applicant’s income tax return or file one of the forms prospectively to claim the exemption.  Applicants must file for an exemption prospectively if they want to be able to purchase a catastrophic plan on the grounds that coverage is not otherwise available that would cost 8 percent or less of household modified adjusted gross income.

An applicant claiming the exceptions for membership in a recognized religious sect whose members object to insurance, eligibility for services through an Indian health provider, or hardship (including the recently recognized insurance cancellation hardship exemption), must submit the appropriate form to claim the exemption and provide appropriate documentation.  This apparently includes a claim of the hardship exemption that applies to people who are ineligible for Medicaid because their state has not expanded coverage, who must also produce a copy of a form denying Medicaid eligibility.

Applicants claiming an exemption because their income is too low to file taxes do not need to file anything.  Applicants claiming an exemption because they have a gap in coverage of less than 3 months or because they are not legally present in the United States do not need to file an application form prospectively, but can rather obtain the exemption when they file their taxes.  The forms must be mailed to London, Kentucky for processing.

Excepted Benefits

Fourth, the Departments of Health and Human Services, Labor, and Treasury released on December 20, 2013, a proposed rule amending the excepted benefit provisions of their regulations.  “Excepted benefits” were created by the Health Insurance Portability and Accountability Act of 1996.  They are benefits that offer health or health-related coverage that were not subjected to HIPAA’s health insurance requirements, such as its limits on pre-existing condition clauses.  Benefits that were excepted under HIPAA are not subject to the ACA’s market reforms, but also do not fulfill the ACA’s individual responsibility requirement.  Excepted benefits received from an employer do not disqualify an employee from receipt of premium tax credits through an exchange if the employer does not also offer affordable and adequate health insurance.

HIPAA enforcement is shared by Treasury, HHS, and Labor, so these are joint regulations.  Under current HIPAA regulations, four categories of excepted benefits are recognized:

  • Benefits that are not generally health coverage, although they may cover some health conditions; examples include automobile and liability insurance, workers compensation, and accidental death and dismemberment insurance. These are always excepted;
  • Limited benefits, such as vision, dental, or long-term care benefits, which are excepted only if they are provided under a separate insurance policy, certificate or contract, or, alternatively, are not an integral part of a group health plan (flexible spending accounts can qualify in this category if certain conditions are met);
  • Non-coordinated excepted benefits, such as cancer policies or fixed indemnity coverage, which are excepted only if the benefits are provided under a separate policy, certificate or contract; there is no coordination between the limited benefits and exclusions under a group plan maintained by the same plan sponsor; and the benefits are paid regardless of whether benefits are provided under the group health plan.  (HHS has also clarified that limited-benefit coverage is income replacement and not health coverage and must be paid on a per-time period rather than per-service basis); and
  • Supplemental excepted benefits, which are supplemental to Medicare or similar programs and paid under a separate, policy, certificate, or contract.

How the proposal would expand excepted benefits.  The new proposed rule would expand excepted benefits in three ways.  First, it would allow self-insured plans to cover vision and dental benefits without an extra premium payment.  Second, it would permit limited group wraparound coverage of individual coverage as excepted benefits.  Third, it would recognize certain employee assistance programs (EAPs) as excepted benefits.

Under current rules, self-insured group plans cannot offer dental or vision coverage unless employees pay a separate, at least nominal, premium for the coverage.  The proposed rule would eliminate this requirement so that self-insured plans can offer oral and vision coverage without an additional payment.

The second proposed amendment to the rules would allow limited wraparound coverage as an excepted benefit.  The ACA is the first federal law to establish a defined “essential health benefit” package for the individual and small group market, and to require large employers to provide a minimum benefit package to full-time employees or pay a tax for full-time employees who end up getting coverage subsidized by premium tax credits through the exchange.  Many large group employers, however, offer coverage that extends beyond the EHB, covering, for example, adult dental and vision, out-of-network providers, or alternative and complementary health care.

If group coverage is unaffordable, that is the employee contribution for coverage exceeds 9.5 percent of modified adjusted gross household income, an employee can receive premium tax credits and cost-sharing reduction payments in the exchange.  To receive this assistance, however, the employee must forfeit employer coverage.  If the employer offers coverage beyond the essential health benefits available in the exchange, the employee is disadvantaged if he or she must forfeit the additional coverage to get tax-credit subsidized exchange coverage.

The proposed rule would permit an employee who cannot afford employer coverage to get subsidized coverage through the exchange but also receive “wraparound” coverage from the employer as excepted benefits to supplement the exchange coverage.  To qualify as excepted benefits, however, the wraparound coverage must meet certain conditions intended to keep employers from using wraparound coverage to replace group medical coverage and to require employers to offer their lower-income employees comparable coverage to higher-income employees.

To satisfy these requirements, the proposed regulations impose several conditions on wraparound coverage.  First, it must wrap around individual coverage that is non-grandfathered and does not consist solely of excepted benefits.  Second, the wraparound coverage must provide benefits that are not EHB, or cover the cost of out-of-network EHB providers, or both, although it can also cover cost sharing under the enrollee’s individual insurance policy.  Wraparound coverage cannot provide benefits only under a coordination-of-benefits provision and simply pay for a service when an individual policy does not. Third, the plan sponsor must also offer another group health plan that meets minimum value requirements and is affordable to a majority of its employees, and may only offer wraparound coverage to employees eligible for this primary coverage.  Fourth, the cost of the wraparound coverage cannot exceed 15 percent of the cost of the primary health plan, considering both employer and employee contributions.

Finally, the wraparound coverage must be offered on a nondiscriminatory basis.  The coverage must not differentiate among individuals in eligibility, benefits, or premiums based on a health factor of an enrollee or dependent.  Wraparound coverage may also not impose a preexisting condition limitation.  Employers also may not discriminate in favor of highly compensated individuals in offering either the primary or wraparound coverage.  These conditions are intended to discourage employers from shifting their high-cost or low-wage employees to the exchange.  This is, notably, the first time that the agencies have attempted to implement a provision of the ACA that prohibits discrimination in insured coverage in favor of highly compensated employees, which has been in place for nearly four years but not been enforced.

The third proposed amendment to the rule would permit EAPs to qualify as excepted benefits.  EAPs are programs offered by employers to address problems of employees that might affect their work or health.  Benefits may include short-term substance abuse or mental health counseling and referral, financial counseling, or legal services.  These programs are popular with employers and beneficial to employees, but should not be used as a substitute for health benefits.  Employers are concerned that if these programs were treated as health benefits they could not impose annual dollar limits on coverage, while consumers are concerned that EAP programs not be considered as minimum essential coverage that would exclude recipient employees from premium tax credit eligibility.

The proposed rule would recognize EAP programs as excepted benefits if four conditions are met:

  • The programs cannot offer significant medical care benefits;
  • The benefits under the EAP cannot be coordinated with other group health benefits; specifically, health plan benefits cannot be made contingent on employees exhausting EAP benefits and EAP benefits cannot be made dependent on participating in a group health plan;
  • Benefits under the EAP cannot be financed by another group health plan; and
  • Employees cannot be required to pay premiums or contributions as a condition of participation in an EAP.

The proposed rules would apply to EAPs as of 2015.  Until then, employers may rely on guidance issued earlier recognizing employee assistance programs as excepted benefits if they do not offer significant medical benefits.

December 24 update:  On December 24, 2013, CMS noted in a press release that it had received 2 million site visits on December 23 and 250,000 calls to its call center.  A high volume of calls and site visits continued on December 24.  CMS did not release any numbers for enrollments on the 23rd or 24th, but presumably few of these contacts were made out of idle curiosity.

Although enrollments effectuated on the 25th (when the call center will be closed) or later will not be effective until February 1, 2014, the press release stressed that consumers who had “tried to enroll prior to today and had problems with the system,” should contact the Marketplace call center.  CMS, the release states, has, “developed a robust casework process to address individual inquiries, respond to specific situations, and help consumers transition to new coverage.”

The exchange rules provide for a special enrollment opportunity when

The qualified individual’s, or his or her dependent’s, enrollment or non-enrollment in a QHP is unintentional, inadvertent, or erroneous and is the result of the error, misrepresentation, or inaction of an officer, employee, or agent of the Exchange or HHS, or its instrumentalities as evaluated and determined by the Exchange. In such cases, the Exchange may take such action as may be necessary to correct or eliminate the effects of such error, misrepresentation, or inaction.

In its interim final rule release of December 12, 2014, CMS stated, “We note that, if a consumer is not able to enroll in a QHP with a coverage effective date of January 1, 2014 due to an error made by the Exchange, it would warrant a special enrollment period. . .”  It is possible, therefore, that applicants who applied before the 24th but whose applications were not completed because of error on the part of the exchange may still be able to enroll by January 1, 2014, at least if insurers consent.