Expatriate Plan Exemptions from the ACA

Consolidated and Further Continuing Appropriations Act, 2015 clarifies the application of the ACA to “expatriate health plans”. 

The legislation – which applies to both insured and self-insured plans – exempts expatriate plans from most of the health care market reform requirements of the ACA.  While employer shared responsibility requirements continue to apply, such plans will be deemed to be minimum essential coverage for purposes of the individual mandate and employer shared responsibility although the reporting requirements related to those requirements (Section 6055 and 6056) continue to apply. Employers must provide a notice of coverage options to each employee, regardless of plan enrollment status, part-time, or full-time status. It does not have to be provided to retirees or COBRA beneficiaries. In addition, employers are not required to provide a separate notice to dependents or other individuals who are (or may become) eligible for coverage under the plan, but who are not employees.

Content

To satisfy the content requirements, the DOL has provided two model notices, which  include an optional section for employee specific information. In order to complete the notice, employers that offer coverage will need to know whether their plan is “affordable” and provides “minimum value” as those terms are defined under the ACA and its regulations.  There is also a model notice for employers that do not offer coverage.

In addition, the various fees applicable to insurers and health plans under the ACA do not apply.

Special Rule for the PCORI fee:  Until the issuance of further guidance, plan sponsors are permitted to determine the PCORI fee by excluding the lives covered under a specified health insurance policy or self-insured health plan that is issued or renewed on or after July 1, 2015, if the policy or plan:

1. was designed and issued specifically to cover primarily employees; or
   • who are working and residing outside the United states, or
   • who are not citizens or residents of the United States but who are assigned to work in the United States for a specific and temporary purpose or who wor in the United States for no more than six months of the policy or plan year; or
2. was designed to cover individuals who are members of a group of similarly situated individuals¹.

• where substantially all the covered employees are “qualified expatriates”;
• which do not consist primarily of excepted benefits;
• which cover inpatient hospital services, outpatient facility services, physician services and emergency services;
• which the plan sponsor reasonably believes meets the 60% minimum value requirements of the ACA;
• which provide coverage for depends to age 26 (if it offers dependent coverage); and
• which meet certain requirements of HIPAA including preexisting conditions, special enrollment, nondiscrimination Michelle’s law, mental health parity, newborn coverage, women’s health and cancer rights, and GINA.

Qualified expatriates are employees:

• whose skills and expertise caused the employer to temporarily transfer or assign them to the U.S., who are reasonably determined to require access to health insurance in multiple countries, and to whom the employer periodically offers other multinational benefits (such as tax equalization, compensation for cross-border moving expenses, or compensation to permit the expatriate to return to their home country; or
• working outside the U.S. for at least 180 days in a consecutive 12-month period that overlaps with the plan year.

It also includes members of groups formed to travel internationally to do nonprofit work.

¹This provision is primarily relevant to tax-exempt charitable organization and is not discussed here.