DOL, and HHS have issued proposed regulations on expatriate health
plans, expatriate health issuers and qualified expatriates under the
Expatriate Health Coverage Clarification Act of 2014
Background. The ACA made various changes to federal
health care laws, including implementing certain market reforms
and information reporting requirements. Prior to the enactment of
EHCCA, there were many questions about how ACA's rules applied to
expatriate health plans, U.S. assignees working abroad, and foreign
nationals working in the U.S.
the EHCCA, the ACA generally does not apply to: (i) expatriate health
plans; (ii) employers, as plan sponsors of expatriate health plans;
and (iii) expatriate health insurance issuers. Despite this general
exception, EHCCA does subject expatriate health plans to certain ACA
requirements, including the employer mandate and information
Highlights from the proposed regulations are as follows:
market reforms. The proposed
regulations confirm that the ACA's market reforms generally do not
apply to expatriate health plans.
requirements. Expatriate health
plans must provide coverage for inpatient hospital services,
outpatient facility services, physician services and emergency
Benefits. Substantially all of
the benefits provided under an expatriate health plan must be
benefits that are not excepted benefits. The proposed regulations
consider group or individual supplemental health insurance benefits
and travel insurance to be excepted benefits.
health plan defined. An
expatriate health plan is a plan where "substantially all"
(i.e., at least 95%) of the primary enrollees are qualified
value. An expatriate health plan
sponsor must reasonably believe that benefits provided under the plan
satisfy the ACA's minimum value requirements.
coverage. Where an expatriate
health plan provides coverage for dependent children, such coverage
must be available until the dependent attains age 26, unless the
dependent is a dependent of a dependent who is receiving coverage.
condition exclusion. Expatriate
plan sponsors are significantly restricted from imposing preexisting
condition exclusions. In fact, the proposed regulations require that
the period of any preexisting condition exclusion be reduced by the
length of any period of creditable coverage the individual had
without a 63-day break in coverage.
Information Reporting. Information
reporting provisions under Code sections 6056 and 6055 continue to
apply to expatriate plans under the proposed regulations.
insurers. The proposed
regulations specify that a non-U.S. insurer does not qualify as an
expatriate health insurer under EHCCA.
Indemnity Insurance. The
proposed regulations add new requirements for hospital and other
indemnity insurance to comply with in order to be considered an
excepted benefit. For instance, enrollment materials provided to
enrollees must indicate that the coverage is a supplement to major
medical coverage and that a failure to have MEC may result in
Limited Duration Insurance. The
proposed regulations change the definition of short-term,
limited-duration insurance requiring that coverage must be less than
three months in duration with or without an insurer's consent. A
notice of the three-month term would also be required in application
Mandate. The ACA's individual
mandate requires most individuals to either obtain minimum essential
coverage or pay a penalty. The proposed regulations clarify that
expatriate coverage will qualify as minimum essential coverage.
for Employers. The proposed
regulations clarify the application of many ACA and EHCCA rules and
alter definitions applicable to expatriate health plans and insurance
issuers. Employers should review their expatriate plans, work with
their insurance issuers, and speak with legal counsel to confirm that
expatriate health plan requirements are still being met under the