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Delaware Lawmakers Seek Changes to Expatriate Health Plan Regs

SEP. 1, 2016

Delaware Lawmakers Seek Changes to Expatriate Health Plan Regs

DATED SEP. 1, 2016
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September 1, 2016

 

 

The Honorable Jacob J. Lew

 

Secretary

 

U.S. Department of the Treasury

 

1500 Pennsylvania Avenue, NW

 

Washington, DC 20220

 

 

The Honorable Thomas Perez

 

Secretary

 

U.S. Department of Labor

 

200 Constitution Avenue, NW

 

Washington, DC 20210

 

 

The Honorable Sylvia M. Burwell

 

Secretary

 

U.S. Department of Health and Human Services

 

200 Independence Avenue, SW

 

Washington, DC 20201

 

 

Dear Secretary Lew, Secretary Burwell, and Secretary Perez:

We write to you to share our concerns regarding the Notice of Proposed Rulemaking (NPRM) issued by your Departments on June 10, 2016, as the beginning of the process of adopting formal regulations to implement the Expatriate Health Coverage Clarification Act (EHCCA). As we have emphasized in earlier letters and in multiple statements before Congress, our goal is and always has been to ensure that U.S. issuers of expatriate health plans can compete on a level playing field with their foreign counterparts. We led the charge to pass the EHCCA because we understood that certain provisions of the Affordable Care Act (ACA) inadvertently posed competitive disadvantages to U.S. companies trying to compete in the global marketplace.

Unfortunately, the NPRM from June of this year contains provisions that are not based in statute and will prevent U.S. insurance companies from competing with their foreign counterparts on a level playing field, endangering these U.S. businesses and putting these good jobs at risk. As currently written, the NPRM would have the unintended consequences of allowing foreign issuers to welcome any plan sponsor and sell a single plan to provide coverage for its globally mobile workforce, while requiring U.S.-issuers to work with their plan sponsors to review the nationality, expected travel plans, and anticipated medical needs of their entire globally mobile workforce to determine whether all of the criteria for being a qualified expatriate health plan that covers only qualified expatriates are satisfied before U.S. issuers can offer coverage. This is not what Congress intended.

Our more specific comments on the NPRM follow, but we want to reiterate our desire and intent to see the EHCCA implemented in such a way that protects American jobs and American revenue by allowing U.S. issuers of expatriate health plans to fairly compete with foreign issuers.

1. "Substantially all" requirement

Section 3(d)(2)(A) of the EHCCA provides that substantially all of the primary enrollees of an expatriate health plan must be qualified expatriates. The NPRM proposes that a plan satisfies the "substantially all" requirement if, "on the first day of the plan or policy year, less than 5 percent of the primary enrollees (or less than 5 primary enrollees if greater) are not qualified expatriates."

Congress did not include a numeric definition of the "substantially all" requirement in the EHCCA because that would have been an arbitrary and restrictive requirement on U.S. insurance companies not applicable to foreign health insurers, thereby putting U.S. companies at a competitive disadvantage. This threshold also puts smaller expatriate health insurance plans at a disproportionate risk of losing the protections afforded by EHCCA.

We believe it would be more consistent with the spirit and language of the EHCCA if the Departments adopted a good faith standard for plan sponsors and plan issuers to comply with the "substantially all" requirement and request that the numerical definition be removed before final rulemaking occurs.

2. Category A qualified expatriates

To qualify as a category A qualified expatriate, EHCCA section 3(d)(3)(A)(ii) says the individual must be "reasonably determined by the plan sponsor to require access to health insurance and other related services and support in multiple countries. . . ." The NPRM says an individual who is not expected to travel outside the U.S. at least one time per year during the coverage period would not reasonably require access to health coverage and other related services and support in multiple countries.

We do not understand the genesis of this requirement or why the Departments proposed it. The statute says, for category A qualified expatriates, the plan sponsor must reasonably determine whether a primary insured requires access to health insurance and other related services and support in multiple countries.

For purposes of category A expatriates, the Departments are making a determination Congress clearly intended for plan sponsors to make. The statute does not provide the Departments with this discretion. This determination should remain the responsibility of the plan sponsor, consistent with the EHCCA.

As a result of this new requirement, the NPRM would treat U.S. insurance companies differently than foreign health insurers. Therefore, U.S. insurance companies would be at a competitive disadvantage, resulting in the loss of U.S. jobs and U.S. revenue. We respectfully request the Departments eliminate this provision of requiring individuals to travel outside of the U.S. at least one time per year from the final rule.

3. Category B qualified expatriates

EHCCA section 3(d)(3)(B) provides that a category B qualified expatriate is a primary insured who is working outside the U.S. for a period of at least 180 days in a consecutive 12-month period that overlaps with the plan year. The Departments, in the NPRM, state: "Consistent with the statutory language, the proposed regulations provide that a category B expatriate is an individual who is a national of the United States and who works. . . ." The EHCCA does not contain a requirement that category B qualified expatriates be U.S. nationals, so the NPRM is not consistent with the statute.

The addition of this requirement, not found in the EHCCA or prior guidance, would have significant negative consequences for U.S. insurance companies. If category B qualified expatriates must be U.S. nationals, third-country nationals (TCNs) working outside the U.S. (e.g., a French national working in Italy) would not be qualified expatriates and, therefore, would not count for purposes of meeting the "substantially all" requirement. If TCNs are not counted as qualified expatriates, plans that cover primarily TCNs, which are otherwise allowed, would not qualify as expatriate health plans under the EHCCA, making it impossible for U.S. insurers to compete with foreign insurers. Therefore, we request that the Departments remove the limitation requiring that category B expatriates be nationals of the U.S.

4. Category C qualified expatriates

To qualify as a category C qualified expatriate, section 3(d)(3)(C) of the EHCCA provides that the Secretaries of Health and Human Services, Treasury, and Labor must determine the group requires access to health coverage and other related services and support in multiple countries. The NPRM identifies criteria for meeting this requirement. In the case of a group organized to travel or relocate within the U.S., the Departments propose the individual must be expected to travel or reside in the U.S. for not more than 12 months. This concept is not found in EHCCA. It first appeared in Notice 2015-43.

Category C qualified expatriates require access to health coverage and related services in multiple countries during the entire length of their stay in the U.S. This need is not limited to an arbitrary length of time; rather it continues for as long as they travel or reside in the U.S. for a specific and temporary purpose.

A 12-month time limit conflicts with the intent behind the EHCCA and puts U.S. insurers at an enormous competitive disadvantage. The NPRM would not only impose a requirement on U.S. insurance companies that does not apply to foreign health insurers, it would effectively preclude U.S. insurers from providing expatriate health plans to any category C expatriates entering the U.S. Under the NPRM, U.S.-issued expatriate health plans could cover these individuals for only 12 months, after which time the plan sponsor or individual would have to find alternative coverage, making U.S.-issued plans less attractive than their foreign counterparts.

In another provision of the NPRM applicable to a category C group organized to travel or relocate outside the U.S., the Departments propose the individual must be expected to travel or reside outside the U.S. for at least 180 days in a consecutive 12-month period that overlaps with the policy year (or in the case of a policy year that is less than 12 months, at least half the policy year).

This would impose a requirement on U.S. insurance companies not applicable to foreign health insurers. U.S. insurance companies would not be able to provide coverage for groups that do not meet this requirement such as students studying abroad, university staff teaching abroad, or missionaries on shorter missions. Furthermore, EHCCA does not include the 180-day requirement for category C and only imposes this limitation in category B. Therefore, the Departments have exceeded the discretion afforded them in constructing parameters for category C qualified expatriates.

We believe that the 12-month time limit for individuals coming to the U.S. and the 180-day requirement for individuals leaving the U.S. would both create competitive disadvantages for U.S. insurers, and would not meet the coverage needs of category C expatriates. Therefore, we request the Departments eliminate these provisions from the final rule.

5. Notice of electronic statements

Under section 3(b)(2) of EHCCA, expatriate health plans can provide the statements required under sections 6055 and 6056 of the Internal Revenue Code to individuals through the use of electronic media and the primary insured shall be deemed to have consented to receive the statements in electronic form, unless the individual explicitly refuses such consent.

Despite the EHCCA's clear statement that primary insureds are deemed to have consented to electronic receipt of the statements, the Departments propose to require the reporting entity to notify the recipient 30 days prior to the due date that the statement will be furnished electronically unless the recipient explicitly refuses consent to electronic delivery. The NPRM conflicts with EHCCA, which allows reporting entities to transmit the statements via electronic media with respect to expatriate health plans.

Because the addition of a notice requirement conflicts with statutory intent and imposes a burdensome requirement on issuers and plan sponsors, we request the requirement be removed.

6. Effective date

The NPRM contains a proposed effective date of January 1, 2017. We are concerned that date does not provide sufficient time for issuers, plans, and plan sponsors to comply. The insurance business, for new and renewed policies, involves making pricing and plan design decisions in advance of when coverage will take effect, which means that many decisions for coverage beginning January 1, 2017 have already been made. In order to minimize disruption and allow enough time for all of the changes envisioned in the NPRM to be understood and implemented, we strongly encourage the Departments to reconsider their proposed effective date and, instead, apply an effective date of January 1, 2018 or later.

We respectfully ask that you address all of the above concerns and reconsider provisions of the NPRM so the final rule follows congressional intent. We stand ready to work with you to accomplish the goal that the EHCCA set forth -- to ensure U.S. companies offering expatriate health plans remain competitive in the global marketplace. Please let us know if we can be of any assistance.

Thank you and sincerely,

 

 

Tom Carper

 

U.S. Senator, Delaware

 

 

Christopher A. Coons

 

U.S. Senator, Delaware

 

 

John Carney

 

U.S. Representative, Delaware
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