FAQs on the Use of Exchanges for Ancillary Insurance Products

The Affordable Care Act (ACA) calls for the creation of state-based competitive marketplaces, known as Affordable Health Insurance Exchanges (Exchanges), for individuals and small businesses to purchase private health insurance. According to the Department of Health and Human Services (HHS), the Exchanges will allow for direct comparisons of private health insurance options based on price, quality and other factors, and will coordinate eligibility for premium tax credits and other affordability programs.

ACA requires the Exchanges to become operational in 2014, with enrollment expected to begin on Oct. 1, 2013.

On March 29, 2013, the Department of Health and Human Services (HHS) released a set of frequently asked questions (FAQs) on the use of Exchanges for ancillary products. Although the Exchanges are prohibited from offering any health plan that is not a "qualified health plan" (QHP), Exchange resources and infrastructure, in some instances, may overlap with separate state programs that offer non-QHP ancillary plans.

QUALIFIED HEALTH PLANS

Health plans offered through the Exchange must be certified as "qualified health plans" (QHPs). To be certified by the Exchange as a QHP, health plans must meet minimum standards that are primarily defined in the ACA.

The FAQs confirm that the Exchanges may offer only QHPs, including stand-alone dental plans, to qualified individuals and qualified employers. However, ancillary insurance products (such as stand-alone vision plans, disability insurance or life insurance products), which are not QHPs, may not be offered by an Exchange. But they can be offered by separate state programs that share resources and infrastructure with a state-based Exchange.

INFORMATION ABOUT NON-QHP ANCILLARY PLANS

Although the Exchanges are prohibited from offering non-QHP ancillary plans, an Exchange may provide basic information about ancillary insurance products on the Exchange website (such as explaining the type of coverage these products provide) in certain circumstances. According to the FAQs, this basic information must state that:

• Enrollment in vision and ancillary insurance products does not constitute enrollment in a QHP or enrollment through the Exchange, but rather, enrollment in a separate legally and publicly-distinct program; and
• Advance payment of premium tax credits and cost-sharing reductions are not available for vision or other ancillary insurance products.

For example, an Exchange could include information on its Exchange website or through its call center about stand-alone vision plans and other ancillary insurance products, the benefits these products provide and how to purchase these products. Purchasing information could include a link to a page containing product and pricing information, as well as the ability to purchase the product along with any QHP products. However, this product page would need to include the basic information described above.

In addition, these ancillary products pages may reside on the Exchange information technology infrastructure as long as the web pages and call center information meet the requirements for the reuse of the Exchange information technology infrastructure described below.

REUSE OF STATE-BASED EXCHANGE RESOURCES

According to the FAQs, the Exchange information technology infrastructure can be reused by other, separate non-Exchange state programs to facilitate coverage in ancillary products as long as all of the following conditions are met:

• The Exchange neither provides services nor makes non-QHPs available in a manner that is prohibited or inconsistent with the ACA;
• The agency or program facilitating the coverage is legally and publicly distinct from the Exchange and is responsible for non-Exchange activities;
• Federal funds and Exchange user fees and assessments are not used to support non-Exchange activities;
• Exchange funds are not co-mingled with funds used to support the separate state programs facilitating enrollment in non-QHPs; and
• To the extent that an Exchange resource is used for non-Exchange purposes, the cost of using the resource is paid by the other, non-Exchange state program (an appropriate portion of the costs of rent, maintenance, etc., must be charged to the other, non-Exchange state program).

For example, programming and information technology infrastructure (such as servers or coding for website applications) that supports the Exchange website could be used to support the website of another state program that facilitates enrollment in non-QHP insurance coverage. Under this arrangement, the websites themselves would need to be clearly identified as distinct (for example, the "state Exchange website" and the "other non-Exchange state program website").

Similarly, while the call center supporting the Exchange might also support other non-Exchange state programs, the phone numbers for each program would need to be different and the scripts for the call center operators would need to be tailored to each program. Development of the differing scripts, maintenance of separate phone numbers and associated staff time would need to be charged to the other, distinct non-Exchange state program.

Source: Department of Health and Human Services

This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.

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