Update #8: American Health Care Act Passed by House May Revive Annual and Lifetime Limits in Self-Insured Employer Plans
On May 4, the House Republicans narrowly passed the American Health Care Act (AHCA). Except for effective dates, the provisions impacting employers were generally unchanged (see our previous advisory). One major change to the original bill is that individual states would be permitted to apply for a waiver from several existing ACA regulations. A state waiver could allow coverage to be offered without all of the currently required “essential health benefits.” While this was mainly intended to offer flexibility in the state insurance market, it may indirectly allow self-insured employers to impose annual and lifetime benefit limits.
The ACA only allows annual and lifetime limits in group health plans for benefits that are not “essential health benefits.” Under current regulations, self-insured employer plans can use any state’s benchmark essential health benefits package for this purpose, regardless of where the employer is located, but those state standards do not vary significantly. The AHCA opens up the possibility that some states could obtain waivers that significantly reduce the scope of “essential health benefits,” starting in 2020. If this provision is enacted into law, this could provide self-insured employers throughout the country an opportunity to redesign their plans, by adopting a particular state’s narrow benchmark package, and re-imposing limits on any benefit that state does not deem essential.
The bill now moves to the Senate for consideration, where it is expected to undergo significant change. A working group led by Senate Majority leader Mitch McConnell (R-KY) has already been formed.
In the meantime, employers should continue to comply with the ACA, as its provisions (including the employer mandate and associated reporting) remain the law for now. Contact your DWT attorney for more information on ACA compliance.