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A state, municipal or other Non-Federal governmental employer that provides self-insured group health plan coverage to its employees (coverage that is not provided through an insurer) may elect to exempt its plan from certain requirements of Title XXVII of the Public Health Service Act (PHSA). Title XXVII was added to the PHSA by Title I of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and has been amended by several subsequent laws.
The ACA reduced the number of Title XXVII provisions that can be opted out of by sponsors of self-insured, Non-Federal governmental plans.
Non-Federal government employers (such as state, local and municipal government plans) that sponsor self-insured health plans can request an exemption from the following Title XXVII requirement categories.
Please note that the Non-Federal governmental plan exemption has never been and remains unavailable with respect to the requirements of the Genetic Information Nondiscrimination Act (“GINA”) that are part of the PHSA.
In addition, the PHSA exemption is limited to self-insured plans sponsored by Non-Federal governmental employers; it does not apply to insured plans sponsored by Non-Federal governmental employers or to self-insured plans sponsored by private employers.
Although an opt-out election is generally valid only for the duration of the plan year for which it was made, an opt-out election made pursuant to a collective bargaining agreement remains in effect “for the term of such agreement.” Although only one election is required for all group health plans subject to a collective bargaining agreement, the names of all group health plans covered by the election must be listed in the election document.
Sponsors of multiple group health plans not subject to collective bargaining will have to submit a separate election for each group health plan that wishes to be exempt from any of the four provisions.
The following procedures and requirements apply with respect to a group health plan sponsor’s election to take advantage of the Non-Federal governmental plan exemption.
An election applies for a single specified plan year, or in the case of a plan provided pursuant to a collective bargaining agreement, for all plan years encompassed by the agreement.
Plans must notify each affected enrollee in writing of the election and explain its consequences. The plan will be in compliance with this requirement if it prints the notice prominently in the summary plan description or equivalent description provided to enrollees at the time of enrollment and annually. Notices can be delivered by e-mail if the plan sponsor meets the criteria of the Department of Labor electronic disclosure safe harbor.
Initial notices must be provided prior to the first day of that plan year, and renewal notices must be provided no later than the last day of each plan year.
The CMS has provided a model notice.
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