Question: Our self-insured health plan doesn’t contain any exclusions or limitations for pre-existing medical conditions. Are we affected by the Affordable Care Act’s (ACA’s) rules prohibiting pre-existing condition exclusions (PCEs)?
Answer: Yes. But, as we’ll explain further, the ACA should simplify your plan’s tracking of creditable coverage — but not until the end of 2014.
Eliminating job lock
The portability rules enacted under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) were intended to ameliorate “job lock” — that is, employees’ reluctance to change jobs for fear a pre-existing medical condition wouldn’t be covered under a new employer’s health care plan. HIPAA’s portability rules include:
- Limiting the length of PCEs,
- Requiring plans to issue certificates documenting prior creditable coverage,
- Applying prior creditable coverage to reduce the length of PCEs, and
- Requiring notices when a plan intends to apply a PCE to an individual.
The ACA expands these rules by prohibiting PCEs, starting with the first plan year that begins on or after Jan. 1, 2014. (PCEs for individuals under age 19 have been prohibited since the first plan year beginning on or after Sept. 23, 2010.) Your plan already complies with this rule, but you’ll still be affected by the administrative implications of the PCE prohibition.
Because the purpose of documenting creditable coverage is to reduce the length of PCEs, and PCEs are no longer permitted, your plan will — eventually — no longer need to track creditable coverage or provide certificates of creditable coverage.
Applying the timelines
There’s a special effective date for the rule: Final regulations require plans to continue to track coverage and issue certificates until Dec. 31, 2014. The effective date recognizes that non-calendar-year plans may continue to impose PCEs during 2014.
For example, let’s say Employer A’s health plan has a plan year ending Nov. 30, 2014, and the plan has a PCE. The prohibition on PCEs won’t apply to Employer A’s plan until Dec. 1, 2014. If one of your employees goes to work for Employer A before Dec. 1, 2014, that employee may need to prove creditable coverage to avoid the PCE under Employer A’s health plan.
Discussing the details
For information about HIPAA’s portability rules and how they’re affected by the ACA, contact your benefits advisor. The rules are complex, so an in-depth discussion is warranted.