Expatriate Plans Exempted from Many ACA Provisions

By Edward I. Leeds © Ballard Spahr Jan 12, 2015

In the Consolidated and Further Continuing Appropriations Act, which became law in December 2014, Congress exempted health plans designed to cover expatriates from most of the requirements of the Affordable Care Act (ACA). The exemption will generally apply where a group health plan provides significant health coverage and substantially all of the covered employees fall under any of the following categories:

  • Employees who work outside of the 50 states, Washington, D.C., or Puerto Rico for at least 180 days in a 12-consecutive-month period.
  • Foreign nationals transferred to the United States for a specific and temporary purpose or for a job-related assignment.
  • Employees who are part of a unit established to perform services internationally for a tax-exempt organization (where the Department of Health and Human Services recognizes the need for expatriate coverage).

Although the exemption is extensive, expatriate plans must continue to meet certain ACA requirements. For example:

  • The employer mandate continues to apply, but the coverage provided by an expatriate plan will be deemed to be minimum essential coverage for purposes of complying with the mandate (and for purposes of the individual mandate).
  • Reporting requirements relating to the employer and individual mandates will apply, although electronic distribution of applicable forms will be permitted without participant consent.
  • The 40 percent excise tax on high-value health plans (often referred to as the "Cadillac" tax), scheduled to take effect in 2018, will apply to certain foreign nationals working in the United States.
  • If the expatriate plan covers dependents, it must generally provide coverage up to age 26.

By its terms, the new exemption applies only to health plans issued or renewed on or after July 1, 2015. However, for many expatriate plans, there are currently exemptions in place for market reforms and certain fees and assessments required under the ACA.

Edward I. Leeds is counsel at Ballard Spahr LLP, where he concentrates on issues relating to the design, administration, and taxation of health and other welfare benefits plans. © 2015 by Ballard Spahr LLP. All rights reserved. Reprinted with permission.

Related External Article:

Appropriations Deal Addresses Expatriate Health Plans, Towers Watson, January 2015

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