Pension & Benefits News Certain drug coverage plans should be exempt from nondiscrimination rules, American Benefits Council tells HHS
Wednesday, September 4, 2019

Certain drug coverage plans should be exempt from nondiscrimination rules, American Benefits Council tells HHS

By Pension and Benefits Editorial Staff

The American Benefits Council is urging the Department of Health and Human Services to exempt all employer group waiver plans (EGWP) from the scope of Section 1557 of the Patient Protection and Affordable Care Act (ACA) regarding nondiscrimination in any health program or activity that receives federal financial assistance (FFA). The Council’s comments were sent to HHS in a recent letter in response to proposed regulations on ACA Sec. 1557 that were published in June.

“EGWPs are an important means by which employers provide drug coverage to their retirees and spouses. The resulting coverage is typically offered at reduced costs to retirees. Requiring ACA Sec. 1557 to apply to EGWPs and/or their plan sponsors could result in disincentives for employers to offer such plans. This is not because employers seek to offer discriminatory Part D coverage but rather because of the costs associated with the potential for increased risk of litigation,” the letter states.

Applies to entities that receive FFA. The Council indicates that it does not believe Congress intended that employers would become subject to ACA Sec. 1557 merely for sponsoring a retiree drug benefit for their retirees and spouses. Instead, it contends Congress was only concerned with applying that section to those entities that receive material FFA as a result of the enactment of the ACA, such as exchange individual insurance. Thus, the Council urges all EGWPs be excepted from the scope of ACA Sec. 1557. In the alternative, it requests that clarification be provided as part of any final rulemaking that employers that sponsor a Series 800 EGWP will not be subject to ACA Sec. 1557.

Repeal of taglines. The Council also indicates it supports HHS’ proposed repeal of the ACA Sec. 1557 provisions on taglines, the use of language access plans and notices of nondiscrimination.

“The onerous requirements to provide notice and taglines with every ‘significant communication’ as broadly defined under existing guidance has imposed a significant ongoing regulatory burden and cost on covered entities, including issuers and employers that receive FFA,” the letter states.

The Council cites as an example, as noted in the preamble to the proposed rule, that in practice, the 15-language tagline requirement has resulted in the inclusion of one to two sheets of paper per each significant communication mailed by a covered entity in nearly every written communication sent to a plan beneficiary.


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