The U.S. Department of Health and Human Services (HHS) has issued the final 2017 Notice of Benefit and Payment Parameters, which affects both the group and individual plan markets. This article focuses on the 2017 cost-sharing limits, the latest developments involving the transitional reinsurance fee (TRF), guidance for public exchanges, and exceptions to the individual mandate.

The final regulations generally take effect on May 7, 2016 (although a few provisions don’t take effect until 2017).

Cost-sharing limits for 2017

The 2017 limits on cost sharing will be $7,150 for self-only coverage and $14,300 for other-than-self-only coverage, up from $6,850 and $13,700, respectively, for 2016.

Employers should be aware that these maximum limits on cost sharing are different from the high-deductible health plan (HDHP) limits from the Internal Revenue Service (IRS). For example, for 2016 the IRS HDHP limits are $6,550 for self-only and $13,100 for other-than-self-only, whereas the maximum limits on cost sharing are $6,850 and $13,700, respectively. (Note: The 2017 IRS HDHP limits are expected to be released in the second quarter of 2016.)

Transitional reinsurance fee audits

The TRF is the per-covered-life fee that self-insured group health plan sponsors and issuers must pay for 2014, 2015 and 2016 to defray insurers’ unanticipated expenses in the public exchanges.

In response to comments on the proposed notice, HHS has clarified that third-party administrators (TPAs) involved with the TRF submission process on behalf of contributing entities will not be subject to audits. If a contributing entity has obtained support in preparing its TRF submission from a third party, however, the entity must ensure that the third party cooperates with any audit.

Public exchange issues

  • Public exchange open enrollment. The 2017 and 2018 open enrollment periods will run from November 1 to January 31 (the same as for 2016). Beginning in 2019, the open enrollment period will run from November 1 to December 15.
  • Employer notice. Under the final notice, the public exchange will notify the employer when an employee enrolls in a qualified health plan, rather than when he or she is deemed eligible to enroll (as is currently the case). The notification may be on an employee-by-employee basis or for groups of employees. In either case, the notifications should be sent within a reasonable time frame to give employers as much time as possible to provide the greatest benefit to enrollees.
  • Employer appeals. If an employer prevails in an appeal (by establishing that its coverage meets requirements under the Patient Protection and Affordable Care Act), its employees are not eligible for a subsidy. Under the final notice, after receiving notice of a successful appeal, the public exchange must promptly redetermine eligibility and notify the employee of the requirement to report changes in eligibility.

Individual mandate exemptions

Several provisions in the final notice address the determination of whether an individual qualifies for an exemption from the individual mandate. Under the individual mandate, nonexempt individuals who lack minimum essential coverage may be liable for a penalty when they file their income tax return.

The notice clarifies how the exemption works for members of health care sharing ministries, Indian tribes, incarcerated individuals and residents of states that did not extend Medicaid to adults under age 65. It also addresses the required contribution percentage under the affordability exemption and exchange procedures for incomplete exemption applications. Finally, state public exchanges may use the HHS exemption process to determine individual mandate exemptions indefinitely (states were originally charged with processing exemptions themselves by the start of open enrollment for 2016).

Conclusion

Employers should review their plans in 2016 to determine what, if any, changes are likely to be required for 2017 (including updating cost-sharing limits). They will need to prepare to pay the final TRF payment in 2017, and employers who use a TPA to assist with the TRF submission should ensure that the TPA will cooperate with HHS in the event of an audit.