Expat Act expands relief from ACA requirements
On December 16, 2014, President Obama signed the Expatriate Health Coverage Clarification Act. The new law expands upon previous FAQ’s issued by the Departments of Labor, Health and Human Services that extended temporary relief for expat plans from a number of ACA requirements.
Expatriate plans are permanently exempt from many of the ACA requirements, annual and lifetime maximums, no fee preventive services, dependent coverage up to age 26, summaries of benefits and coverage, nondiscrimination based on compensation and health status, prohibitions on pre-existing exclusions and complying with essential health benefits. Expat coverage is also deemed to satisfy the individual and employer mandates.
While in the past, these provisions were only extended to fully insured plans, the new law provides relief from ACA requirements to self-insured expat plans as well. However, expat plans must meet specific participation and coverage requirements in order to be eligible.
In terms of participation, substantially all of the primary (not dependents) enrollees must be “qualified expats.” This includes
- Employees in the U.S.: Individuals 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 (e.g., tax equalization, compensation for cross border moving expenses, or compensation to return home);
- Employees Outside the U.S.: Individuals working outside the U.S. for at least 180 days in a consecutive 12-month period that overlaps with the plan year;
- Charitable Employees: Members of a group of similarly situated individuals, formed for the purpose of traveling or relocating internationally for nonprofit work, if determined by HHS to require access to health insurance in multiple countries.
Coverage-wise, the new law states that the plan must meet specific minimum value requirements including impatient hospital, physician and emergency services in countries where expats work, as well as satisfy the following standards:
- Substantially all of the benefits are not excepted benefits (i.e., limited-scope dental, vision, health FSA, fixed indemnity);
- The plan covers dependent children until age 26 if dependent child coverage is offered;
- The plan satisfies a number of requirements adopted into law prior to the ACA (including HIPAA special enrollment rights, mental-health parity, Michelle’s Law, Women’s Health and Cancer Rights Act, etc.).
While the passage of the Expatriate Act is a welcome relief for employers sponsoring expat workers, it’s still important to conduct a thorough policy review to ensure that all participation and coverage requirements have been met. Employers who are unsure as to whether their plans comply with the new law should work with consultants who are well-versed in expat coverage and ACA regulations, and who understand the current law and related guidance.
About the Author
James Kinney JD, LLM is a Senior Vice President at WGA, and leads the WGA Global Practice for Employee Benefits, overseeing the leadership of the firm’s international benefits strategy, including the placement of expatriate and local national programs.