HHS Provides Opt-Out Election Guidance for Self-Funded, Non-Federal Governmental Plans

smallUS-DeptOfHHS-Seal.PNGA letter (pdf) written by the Director of the Department of Health and Human Services’ Office of Consumer Information and Insurance Oversight (OCIIO) explains that sponsors of self-funded, nonfederal governmental health insurance plans can no longer opt out of as many Public Health Service (PHS) Act requirements in light of the changes made by the Patient Protection and Affordable Care Act (“Affordable Care Act” or “PPACA”). Specifically, for plan years beginning on or after September 23, 2010, sponsors of such plans can no longer opt out of the following PHS requirement categories, even if those plans are considered “grandfathered”:

  • Limitations on preexisting condition exclusion periods.
  • Requirements for special enrollment periods.
  • Prohibitions against discrimination against individual participants and beneficiaries based on health status (but not including provisions added by the Genetic Information Nondiscrimination Act of 2008 (GINA). Plans cannot opt out of any of GINA’s genetic information protections, or the requirement to provide certificates of creditable coverage.)

Plan sponsors may still elect to opt out of these categories:

  • Standards relating to benefits for newborns and mothers.
  • Parity in the application of certain limits to mental health and substance use disorder benefits (including requirements of the Mental Health Parity and Addiction Equity Act of 2008).
  • Required coverage for reconstructive surgery following mastectomies.
  • Coverage of dependent students on a medically necessary leave of absence.

With respect to collectively-bargained non-federal government health plans, the letter explains that “a group health plan that is maintained pursuant to a collective bargaining agreement that was ratified before March 23, 2010, and that has been exempted from any of the first three requirement categories listed above, will not have to come into compliance with those provisions until the commencement of the first plan year following the expiration of the last plan year governed by the collective bargaining agreement.”

Due to the timing of the guidance letter, the agency will provide an enforcement grace period for plan sponsors to come into compliance with the new opt-out election requirements. Essentially, the HHS will not take any enforcement actions against a non-federal government employer with respect to the opt-out elections for plan years beginning prior to April 1, 2011.

This entry was written by Ilyse Schuman.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.