Are No Lifetime or Annual Limits Required for ACA Compliance in individual, employer or association health plans?
Remaining ACA compliant is crucial for individual, employer group health plans and association health plans. When it comes to complying with the Affordable Care Act (ACA), understanding the requirement of having no lifetime or annual limits is essential. However, the question arises: are no lifetime or annual limits necessary for both individuals and employer groups to be ACA compliant?
No Lifetime or Annual Limits and ACA Compliance:
One of the key provisions of the ACA is the prohibition of lifetime and annual limits on essential health benefits (EHBs). Prior to the enactment of the ACA, many health insurance plans had imposed such limits, which resulted in individuals facing substantial financial burdens when their healthcare needs surpassed these limits. To provide comprehensive coverage, the ACA requires that health plans, including those offered by employers and associations, eliminate lifetime and annual limits on EHBs.
Requirement for Small and Large Employer Groups:
Both small and large employer groups must comply with the ACA’s prohibition of lifetime and annual limits on essential health benefits. The distinction between the two lies in the specifics of penalties for non-compliance:
- Small Group Health Plans: Small group health plans, typically covering 1-50 employees, are subject to the ACA requirement of removing lifetime and annual limits on essential health benefits to ensure compliance.
- Large Employer Group Health Plans: Large employer group health plans, typically covering 51 employees or more, are also required to remove lifetime and annual limits on essential health benefits. However, failure to comply with this requirement may not subject large employers to specific penalties. Instead, non-compliance may affect the plan’s status as a minimum value plan, potentially leading to penalties based on employee access to affordable coverage.
Remaining ACA Compliant:
To ensure ACA compliance with their group health plans, employer group health plans and association health plans should consider the following:
- Understand the Requirement: Employers and associations must have a clear understanding of the ACA provision prohibiting lifetime and annual limits on essential health benefits. This knowledge helps guide their plan design and ensure compliance.
- Review Plan Documents: Employers and associations should review their plan documents, including insurance contracts or administrative agreements, to ensure the removal of lifetime and annual limits on essential health benefits.
- Educate Employees: It is crucial to communicate the elimination of lifetime and annual limits to plan participants. Employers and associations should provide clear information regarding the comprehensive coverage available to employees.
- Consult with Insurance Carriers: Employers and associations should consult with their insurance carriers or third-party administrators to ensure compliance with the ACA’s requirement regarding lifetime and annual limits.
Remaining informed and up to date with the ever-changing healthcare landscape helps employer and association health plans maintain ACA compliance. Consulting an expert in the industry, such as Enrollment First, Inc., can be helpful to ensure a compliant health offering.
Sources:
[1] Prohibition on Lifetime and Annual Limits: https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/Lifetime-Limits-and-Annual-Limits-Guidance.pdf
[2] Compliance FAQs: https://www.dol.gov/agencies/ebsa/about-ebsa/about-us/oversight/legal-information/faqs/aca-compliance-part7
[3] Understanding ACA Employer Penalties: https://www.healthcare.gov/what-do-small-businesses-need-to-know-about-aca-penalties/#k
[4] Healthcare.gov – Small Business Health Options Program (SHOP) Marketplace: Health insurance coverage for small businesses: https://www.healthcare.gov/small-businesses/employers/coverage/
[5] SHRM – Lifetime, Annual Limit Rules Dropped for Employer Health Plans: https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/lifetime-annual-limit.aspx