What You Should Know About Patient Protections and Affordable Care Act Compliance

The Affordable Care Act (ACA) is a comprehensive healthcare reform law that was enacted in March 2010. It has 3 primary goals:

• Make affordable health insurance available to more people.
• Expand the Medicaid program to cover all adults with incomes below 138% of the federal poverty level (FPL).
• Support innovative medical care delivery methods designed to generally lower healthcare costs.

The ACA also mandates that Applicable Large Employers (those with 50 or more full-time employees during the previous calendar year) offer healthcare coverage to eligible employees. Learn more about ACA compliance in this guide.

Determining Applicable Large Employer status

The Affordable Care Act of 2010 (ACA) classifies some businesses that had 50 or more employees in the previous calendar year as Applicable Large Employers (ALEs). Here is how to determine if whether your company is considered an ALE.

1. Count the number of full-time employees. For each month of the last calendar year, determine which employees worked at least 130 hours of service in that month. These are full-time employees.
2. Calculate the number of Full-Time Equivalents (FTEs):
   1. For each month of the last calendar year, add up the hours of service for all non full-time employees, up to a maximum of 120 hours for each employee. Don’t include any hours over 120.
   2. Divide the total by 120. These are the FTEs for each month.
3. Add Full-Time Employees and FTEs: Add together all twelve months of full-time employees and full-time equivalents, and round to the nearest hundredth (two digits to the right of the decimal point).
4. Determine Your Monthly Average: Divide the total from step 3 by 12 to get your monthly average. Round down to the nearest whole number.

Companies with a monthly average of 50 or more in the previous calendar year are considered Applicable Large Employers (ALEs), and are subject to the requirements of the employer mandate. The mandate requires ALEs to offer insurance coverage to employees and their dependents (up to age 26) as they are eligible.

Rate of Pay Safe Harbor

An ACA affordability safe harbor is a technique an employer can use to prove their coverage is affordable.

This safe harbor may be most useful for employers with hourly employees and the need for a fast, “failsafe” calculation method to prove affordability. If the Rate of Pay safe harbor is met for a company’s lowest-paid worker, then it will also be met for the rest of their workforce.

W-2 Wages Safe Harbor

This safe harbor may be most useful to an employer with full-time employees who regularly work 40 hours per week and whose compensation is unlikely to decrease during the year.

Patient protections for choosing a health professional under ACA

The Affordable Care Act requires group heath plans to permit an enrollee to select any available participating primary care provider.

What is the difference between In-Network and Out-of-Network Providers?

Insurance carriers will designate a provider as either in-network or out-of-network:

• An in-network provider is a doctor, specialist, etc. that has contracted with the insurance carrier to participate in a specific network, typically at a lower cost.
• An out-of-network provider is any provider who does not belong to the carrier’s network

Primary Care Physicians

When enrolling in an HMO or POS plan, the enrollee and all enrolling dependents are required to designate a Primary Care Physician (PCP). This doctor will be the gatekeeper for all of the enrollee’s services and referrals (see the articles on HMO plans and POS plans for more information on how these plans operate).

Patient protections for emergency coverage under ACA

Under the Affordable Care Act (ACA), health plans must offer regulated coverage for emergency services.

Definition of Emergency Services

“Emergency Services” are defined as acute symptoms that a prudent layperson with average knowledge of health and medicine would expect that in the absence of medical attention would place the individual’s health in serious jeopardy, or seriously impair body functions, organs, or parts. These services would also be performed in the hospital’s emergency department.

Under the ACA, health plans cannot require:

• Higher copayments or co-insurance for out-of-network emergency room services.
• Approval before seeking emergency room services from a provider or hospital outside a plan’s network.

Patient protections for clinical trials under ACA

Under the Affordable Care Act, health plans or insurers cannot deny patients’ participation in a clinical trial, limit or deny coverage of routine costs to patients who choose to participate in an approved clinical trial, or increase costs because a patient chooses to participate in a clinical trial. This means that an insurer cannot limit benefits if the individual chooses to enroll in a clinical trial.

Health insurance companies are not required to cover the cost of the treatment or procedure being researched; however, the clinical trial’s sponsor may cover these costs.

Protection against rescission under ACA

The Affordable Care Act (ACA) protects enrollees from rescission. Rescission is a cancelation or discontinuation of coverage that has a retroactive effect. Plans and issuers generally must not rescind coverage unless there is fraud, or if an individual makes an intentional misrepresentation of a material fact.

Protections against rescission

1. The plan sponsor may not terminate coverage retroactively if the member was covered through plan error and the member paid premiums or contributed to the cost of the plan.
2. If the member paid premiums or contributed to the cost of the plan, the plan sponsor may only terminate the member’s coverage with a future or prospective date of termination. This limits the liability of the employer to correct administrative errors.

Timing details