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Executive Alert

New Rules Restrict Preexisting Condition Limits, Uncap Lifetime and Annual Limits for Essential Health Benefits, Limit Rescissions and Expand Patient Choice

On June 22, 2010, the U.S. Treasury Department, the Internal Revenue Service (IRS), the Department of Labor’s Employee Benefit Security Administration (EBSA) and the U.S. Department of Health and Human Services (DHHS) issued interim final rules and the proposed regulations to implement the following new Patient Protection and Affordable Care Act (PPACA) provisions:

Prohibit health insurers and group health plan sponsors from imposing preexisting condition limitations on individuals who have not yet attained age 19, and prohibit such insurers and sponsors from denying coverage to such individuals based on the existence of a preexisting condition (and outlaw all such limitations and coverage denials, regardless of age, starting in 2014).
Prohibit health insurers and group health plan sponsors from imposing lifetime dollar limits on essential health benefits, and require health insurers and group health plan sponsors to sharply increase annual dollar limits on essential health benefits (and eventually eliminate such annual limits starting in 2014).
Prohibit coverage rescissions (except in the case of fraud or intentional misrepresentation).
Provide plan-covered and insured individuals with greater control over choosing a primary care physician (and, as applicable, a pediatrician, obstetrician and/or gynecologist), and with greater access to emergency services and related care.

These prohibitions and protections are some of the many changes made by PPACA and by the Health Care Reconciliation Act (which was signed into law as a companion to PPACA).

The rules, which are to be formally published June 28, take effect August 27, 2010. Except as indicated above, they apply to group health plans and health insurers for plan years and policy years beginning on or after Sept. 23, 2010. An analysis of the new rules, and their expected effect on employers and health insurers, will be provided in additional alerts and will be posted on Baker Hostetler’s Health Care Reform website in the near future.

Resources:

Patient Protection and Affordable Care Act; Requirements for Group Health Plans and Health Insurance Issuers Under the Patient Protection and Affordable Care Act Relating to Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, and Patient Protections; Final Rule and Proposed Rule (Updated June 28, 2010)