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GoGetCovered: Insurance for Businesses and Individuals

Proposed Rule to Fix “Family Glitch” Introduced to Strengthen the Affordable Care Act

On April 6, the Biden Administration released a proposed rule to fix the family glitch. Back in 2021, the President issued an Executive Order asking federal agencies to strengthen the Affordable Care Act. This proposed rule is being used to revise the definition of “affordability” of employer-sponsored coverage as it applies specifically to family members of the employee.

The earliest this proposed rule, if approved, would become effective is January 1, 2023. There is a comment period for stakeholders and there remain some tenuous obstacles that could delay the process.

Current regulations define “affordability” as it pertains to employer-based health insurance as coverage solely for the employee, not for family members, thereby making family members ineligible for a premium tax credit. The proposed changes would allow for the family members of workers, who are offered affordable self-only coverage but unaffordable family coverage, to qualify for premium tax credits in the exchange. While this proposal may help to assist family members with the ability to obtain a subsidy, it would not allow the employee to access a premium tax credit if the employee’s offer of coverage from the employer is deemed affordable. More to come on this topic soon!

Preventive Care Services

Almost all group health plans must cover in-network preventive services and immunizations without cost-sharing (e.g., deductibles, coinsurance, and copayments) or annual limits.

Preventive care services and immunizations include:

  • Recommended evidence-based preventive services from the United States Preventive Services Task Force with a rating of A or B
  • Immunizations recommended by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention
  • Preventive care guidelines developed by the Health Resources and Services Administration and the American Academy of Pediatrics
  • Women’s preventive services, including well-woman visits, support for breastfeeding equipment, contraception, and domestic violence screening (certain group health plan sponsors may be exempt from covering contraceptive services, see below)

Contraceptive coverage exemption rules:

Rules finalized under the ACA offer accommodation for eligible organizations that object to covering contraceptive services. Only religious employers – churches or houses of worship as defined by the Internal Revenue Code – can qualify for the exemption. Under the ACA rules, other eligible employers who objected to covering contraceptives on religious grounds were required to self-certify with their insurance carrier or third-party administrator (TPA) or file a notice with the Department of Health and Human Services (HHS). This process placed the responsibility of covering contraceptive services on the insurance carrier or TPA, and ensured the customer/individual policyholder had no cost share expenses for such services.

Final rules issued on Nov. 7, 2018 by multiple federal agencies were set to expand the exemption for employers to not cover contraceptive services under their sponsored group health plans for both religious and moral objections. On Jan. 14, 2019, a Pennsylvania federal court issued a preliminary injunction that prevents the rules from being implemented in any state unless or until the injunction is removed. The injunction maintains the status quo and rules in place under the ACA.

If you have questions about Preventive Services covered under your plan, please check your plan coverage with your current carrier by calling the customer service number on the back of your ID card.

Wellness Programs and Incentives

Federal regulations are complex – understand the rules for “participatory” and “health-contingent” wellness programs and related incentives

Many employers offer wellness programs to support employees and their family members in improving their health. In addition to encouraging a culture of health, these programs are designed to reduce health care costs for both employees and the company.

The current trend in wellness programs is toward health-contingent programs that reward employees for outcomes such as smoking cessation, weight loss, and managing chronic conditions like diabetes and high blood pressure and cholesterol.

A consistent set of wellness program and incentive limit rules were adopted under the Affordable Care Act (ACA) by the Department of Labor (DOL), Health and Human Services (HHS), and the Internal Revenue Service (IRS) and made effective January 1, 2014. The regulations focus on:

  • Two types of wellness programs: participatory and health-contingent (activity-only or outcome-based)
  • Requiring reasonable alternatives in health-contingent programs so everyone has the opportunity to earn the full reward
  • Establishing the value of incentives that can be awarded for some types of programs
  • Requiring employers to offer the opportunity to earn incentives at least once per year

Other wellness program rules and regulations

The ACA rules are just one set of federal regulations that impact employer wellness programs. Rules adopted in 2016 by the fourth agency, the Equal Employment Opportunity Commission (EEOC), under the Americans with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA) also need to be considered by employers when designing wellness programs.

The incentive limits in EEOC’s 2016 rules were challenged by the American Association of Retired Persons (AARP) as being too high and potentially coercive. The D.C. District Court found the limits to be insufficiently justified, and issued an order to vacate the rules on January 1, 2019 if clarification or new rules were not issued. The EEOC has formally removed incentive limits from ADA and GINA, but has not provided insight on an anticipated date for new rules. ADA and GINA incentive limits are no longer effective as of January 1, 2019. It is important to note that the remaining sections of the ADA and GINA rules (e.g., ADA’s reasonable accommodations and GINA’s limited use of collecting genetic information) remain in effect.

Americans with Disabilities Act (ADA)

Under the ADA regulations, employers are allowed to ask disability-related questions and conduct medical exams for voluntary wellness programs that promote health or wellness. There are several key differences between the ACA and the ADA:

  • Reasonable accommodations must be provided if an employee is unable to complete part or all of a wellness program for disability-related reasons (a reasonable alternative under the ACA can be considered a form of reasonable accommodation under the ADA)
  • Employers may only receive information from wellness programs in aggregate, any individually identifiable information received is considered PHI
  • Privacy notices describing the handling of medical information, and procedures for safeguarding information privacy must be distributed to all wellness program participants
ADA safe harbor not applicable

The statutory text of the ADA provides a safe harbor that allows medical inquiries and examinations to be conducted in connection with a “bona fide benefit plan.” This statutory language has been interpreted to include employer-sponsored wellness programs within that safe harbor, and the courts have agreed.* The final ADA regulations clearly state that the “bona fide benefit plan” safe harbor does not apply to rewards and penalties offered in connection with an employer’s wellness program that includes disability-related inquiries or medical examinations, and go on to state that the EEOC does not agree with the outcome of the cases on this issue.

Genetic Information Nondiscrimination Act (GINA)

Under GINA, employers may solicit genetic information from the employee as part of a wellness program, so long as it is made clear that disclosing this information is voluntary.

Other key differences between GINA and ACA include:

  • Limits use of genetic health information collected through a wellness program
  • Regulates sharing of health information collected from spouses
  • Prohibits health and genetic information collection from employees’ children
  • Prohibits the sale of genetic information provided through a wellness program to other vendors

In combination, it is clear that compliance with one set of regulations does not necessarily ensure compliance with all the others. Employers should review their wellness programs and incentives against all regulations, and consult with their current carrier and broker for more information.

2021 Updates on Cost Sharing

These limits apply to in-network out-of-pocket costs for most health plans:

Cost-sharing limits overview

The Affordable Care Act (ACA) requires limits for consumer spending on in-network essential health benefits (EHBs) covered under most health plans. These are known as out-of-pocket (OOP) maximum limits.

OOP maximums include deductibles, copays, and coinsurance costs paid by consumers. They do not include health plan premiums or out-of-network costs.

OOP limits apply to most health plans. Specifically, they apply to all non-grandfathered individual and group plans, regardless of size or whether the plan is insured or self-funded.

Annual OOP maximum limits

The in-network OOP maximums are adjusted annually. Current amounts are:

comparison chart: 2020-2021 OOP Maximums

Embedded individual OOP maximum in family plans

Effective Jan. 1, 2016, most health plans cannot allow any individual, including those with family coverage, to spend more than the individual OOP maximum established under the ACA. This is commonly referred to as an “embedded” individual OOP maximum.

Additional rules for Health Savings Account (HSA) plans

In addition to the ACA cost-sharing limits, HSA-compatible high-deductible health plans (HDHPs) must follow additional Internal Revenue Service (IRS) rules. These rules require plans to have minimum deductible amounts and maximum OOP limits that differ from the ACA OOP limits.

This chart combines the 2021 ACA and IRS rules for HSA-compatible HDHPs:

2021 ACA and IRS rules for HSA-compatible HDHPs

* There is not a stated IRS minimum deductible for individuals with family coverage. However, if a family plan has a separate individual deductible amount for individual family members, that amount must be at least as high as the ACA minimum family deductible.

Final Regulations – 2021 Notice of Benefit and Payment Parameters

On May 7, 2020, the Centers for Medicare & Medicaid Services (CMS) issued final regulations and related guidance on a number of Affordable Care Act (ACA) provisions and related health care topics including out-of-pocket (OOP) maximums, prescription drug coupons and cost-sharing, Medical Loss Ratio (MLR) calculations, and Exchange updates and reforms. These regulations are generally effective for plan years beginning on and after Jan. 1, 2021.

2021 OOP maximums

The 2021 OOP maximums will increase to $8,550 for individual coverage and $17,100 for family coverage. These coverage limits apply to all non-grandfathered plans, regardless of size or funding type.

Prescription drug coupons

Beginning in 2021, plans are permitted, but not required, to include coupon amounts and other drug manufacturer direct assistance for prescription drugs as amounts paid toward a covered person’s annual OOP maximum, regardless of whether a generic equivalent is available. This applies to individual, small group, large group, and self-funded plans, to the extent permitted by state laws.

Medical Loss Ratio

Beginning with the 2022 MLR reporting year (i.e., MLR reports filed in 2023), issuers must report expenses of functions outsourced to, or services provided by, other entities consistently with issuers’ non-outsourced expenses. It also requires issuers to deduct prescription drug rebates and price concessions from MLR incurred claims. These rebates and price concessions must be deducted not only when received by the issuer, but also when received and retained by an entity that provides pharmacy benefit management services to the issuer.

Exchange regulations

The final rule includes a number of provisions that impact the Health Insurance Exchanges, including:

  • Maintain user fees from the 2020 plan year for Federally-facilitated Exchanges and State-based Exchanges on the Federal platform, 3.0% and 2.5% of total monthly premiums, respectively;
  • Finalize how Qualified Health Plan (QHP) issuers could voluntarily incorporate value-based insurance design principles into their QHPs;
  • Exchange eligibility enrollment and termination requirements;
  • Establish quality-rating information-display standards for Exchanges; and
  • Finalize changes to the risk adjustment program for insurers with high-cost enrollees.

The final rule also makes improvements, some beginning in January 2022, to Special Enrollment Period (SEP) rules.

Review the information at these links for additional details: