FAQ A A C A
S  BOUT  FFORDABLE  ARE  CT 
I P 35 
MPLEMENTATION  ART 
U.S. Department of Labor 
Employee Benefits Security Administration 
December 20, 2016 
 
Set out below are additional Frequently Asked Questions (FAQs) regarding implementation of 
the Affordable Care Act, the Health Insurance Portability and Accountability Act of 1996 
(HIPAA)1, and the 21st Century Cures Act (Cures Act)2.  These FAQs have been prepared jointly 
by the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury 
(collectively, the Departments).  Like previously issued FAQs (available at 
www.dol.gov/ebsa/healthreform/index.html and www.cms.gov/cciio/resources/fact-sheets-and-
faqs/index.html), these FAQs answer questions from stakeholders to help people understand 
the laws and benefit from them, as intended.   
 
SPECIAL ENROLLMENT FOR GROUP HEALTH PLANS 
 
Under HIPAA, group health plans and health insurance issuers providing group health 
insurance coverage are required to provide special enrollment periods to current employees 
and dependents during which otherwise eligible individuals who previously declined health 
coverage have the option to enroll under the terms of the plan (regardless of any open 
enrollment period).  Generally, a special enrollment period must be offered for circumstances 
in which an employee or dependents lose eligibility for any group health plan or health 
insurance coverage in which the employee or their dependents were previously enrolled, and 
upon certain life events such as when a person becomes a dependent of an eligible employee 
by birth, marriage, or adoption.3  The Childrens Health Insurance Program (CHIP) 
Reauthorization Act added other special enrollment rights to group health plan coverage for 
circumstances in which an employee or dependents lose Medicaid or CHIP, or become eligible 
for assistance for group health plan coverage under Medicaid or CHIP.  Special enrollment 
periods are available in several circumstances set forth in the Departments regulations, 
including when (subject to certain exceptions) an individual loses eligibility for coverage under 
a group health plan or other health insurance coverage (such as an employee and dependents 
loss of coverage under the spouses plan), when an employer terminates contributions toward 
health coverage (other than COBRA continuation coverage), or when coverage is no longer 
offered to a group of similarly situated individuals.4  The Departments regulations require that 
employees receive a notice of special enrollment at or before the time they are first offered 
the opportunity to enroll in the group health plan. 
                                                 
1 Pub. L. 104-191, 110 Stat. 1936. 
2 Pub.L. 114-255. 
3 Internal Revenue Code (Code) section 9801(f); Employee Retirement Income Security Act (ERISA) section 701(f); 
Public Health Service (PHS) Act section 2704(f); 26 CFR 54.9801-6(a); 29 CFR 2590.701-6(a); 45 CFR 146.117(a). 
4 Code section 9801(f)(1)(C); ERISA section 701(f)(1)(C); PHS Act section 2704(f)(1)(C); 26 CFR 54.9801-6 (a)(3); 29 
CFR 2590.701-6(a)(3); 45 CFR 146.117(a)(3).  A model notice is available at: 
https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/publications/cagappc.pdf.   
Q1:  If an individual who enrolled in individual market health insurance coverage, 
including coverage purchased through a Marketplace, loses eligibility for 
that coverage, is the individual entitled to a special enrollment period in an 
employer-sponsored group health plan for which the individual is otherwise 
eligible and had previously declined to enroll? 
 
Yes.  Employees and their dependents are eligible for special enrollment in a group health plan 
if they are otherwise eligible to enroll in the plan, and at the time coverage under the plan was 
previously offered, they had other group health plan or health insurance coverage (regardless 
of whether the coverage was obtained inside or outside of a Marketplace) for which they have 
lost eligibility.  Accordingly, if an individual loses eligibility for coverage in the individual 
market, including coverage purchased through a Marketplace (other than loss of eligibility for 
coverage due to failure to pay premiums on a timely basis or termination of coverage for 
cause, such as making a fraudulent claim or an intentional misrepresentation of a material 
fact), that individual is entitled to special enrollment in group health plan coverage for which 
he or she is otherwise eligible.  These individuals will be eligible for special enrollment in the 
group health plan coverage regardless of whether they may enroll in other individual market 
coverage, through or outside of a Marketplace.  
 
COVERAGE OF PREVENTIVE SERVICES UNDER THE AFFORDABLE CARE ACT 
 
PHS Act section 2713 and its implementing regulations5 require non-grandfathered group 
health plans and health insurance coverage offered in the individual or group market to cover 
without the imposition of any cost-sharing requirements, the following recommended 
preventive services: 
  Evidence-based items or services that have in effect a rating of A or B in the current 
recommendations of the United States Preventive Services Task Force (USPSTF) with 
respect to the individual involved, except for the recommendations of the USPSTF 
regarding breast cancer screening, mammography, and prevention issued in or around 
November 2009, which are not considered in effect for this purpose;6  
  Immunizations for routine use in children, adolescents, and adults that have in effect a 
recommendation from the Advisory Committee on Immunization Practices (ACIP) of the 
Centers for Disease Control and Prevention (CDC) with respect to the individual 
involved;  
  With respect to infants, children, and adolescents, evidence-informed preventive care 
and screenings provided for in comprehensive guidelines supported by the Health 
Resources and Services Administration (HRSA); and  
                                                 
5  See 26 CFR 54.9815-2713, 29 CFR 2590.715-2713, 45 CFR 147.130. 
6  The USPSTF published updated breast cancer screening recommendations in January 2016. However, section 
229 of the Consolidated Omnibus Appropriations Act of 2016 (Pub. L. 114-113) requires that for purposes of 
PHS Act section 2713, USPSTF recommendations relating to breast cancer screening, mammography, and 
prevention issued before 2009 remain in effect until January 1, 2018.  
2 
    With respect to women, evidence-informed preventive care and screenings provided 
for in comprehensive guidelines supported by HRSA, to the extent not included in 
certain recommendations of the USPSTF.7 
If a recommendation or guideline does not specify the frequency, method, treatment, or 
setting for the provision of a recommended preventive service, then the plan or issuer may use 
reasonable medical management techniques to determine any such coverage limitations.8 
 
Q2:  HRSA updated its Womens Preventive Services Guidelines on December 20, 
2016.  When must non-grandfathered group health plans and health 
insurance issuers begin offering coverage for preventive services without 
cost sharing based on the updated guidelines? 
 
Womens preventive services are required to be covered without cost sharing in accordance 
with the updated guidelines for plan years (or, in the individual market, policy years) 
beginning on or after December 20, 2017.9  Until the new guidelines become applicable, non-
grandfathered group health plans and health insurance issuers are required to provide 
coverage without cost sharing consistent with the previous HRSA guidelines and PHS Act 
section 2713 for any items or services that continue to be recommended. 
 
HRSAs updated womens preventive services guidelines were recently released based on 
recommendations developed by the Womens Preventive Services Initiative (WPSI), a coalition 
of national health professional organizations and consumer and patient groups with expertise 
in womens health.  The update is available at https://www.hrsa.gov/womensguidelines2016.  
WPSI is led, through a competitive cooperative agreement, by the American College of 
Obstetricians and Gynecologists.  In developing these guidelines, WPSI engaged its coalition of 
health professional organizations and consumer and patient advocates to develop, review, and 
update recommendations for womens preventive services.  
 
These updated guidelines complement and build upon recommendations from entities such as 
the USPSTF.  These recommendations update prior work by the Institutes of Medicine (IOM) to 
develop the initial Womens Preventive Service Guidelines, meet a recommended five-year 
benchmark for updates (by the IOM), and help ensure the guidelines remain current with the 
existing science and evidence-based practices.  Similar to the processes of the USPSTF, ACIP, 
and Bright Futures10 for developing evidence-based guidelines, WPSI established a process for 
                                                 
7  Under the HRSA Womens Preventive Services Guidelines, group health plans established or maintained by 
religious employers (and group health insurance coverage provided in connection with such plans) are exempt 
from the requirement to cover contraceptive services under section 2713 of the PHS Act, as incorporated into 
ERISA and the Code.  45 CFR 147.131(a).  Additionally, accommodations for religious objections to 
contraception are available to group health plans established or maintained by certain eligible organizations 
(and group health insurance coverage provided in connection with such plans), as well as student health 
insurance coverage arranged by eligible organizations, with respect to the contraceptive coverage requirement. 
8  See 26 CFR 54.9815-2713(a)(4), 29 CFR 2590.715-2713(a)(4), 45 CFR 147.130(a)(4). 
9  See 26 CFR 54.9815-2713(b), 29 CFR 2590.715-2713(b), 45 CFR 147.130(b). 
10 For more information on Bright Futures, see https://brightfutures.aap.org. 
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  stakeholders to provide public comment that included defining the scope of the 
recommended guidelines, identifying and assessing the evidence base, and disseminating the 
final HRSA-supported guidelines. 
 
QUALIFIED SMALL EMPLOYER HEALTH REIMBURSEMENT ARRANGEMENTS 
 
On September 13, 2013, DOL published Technical Release 2013-0311 addressing the application 
of the Affordable Care Act market reforms to health reimbursement arrangements (HRAs) and 
employer payment plans (EPPs).12  The Treasury Department and the Internal Revenue Service 
(IRS) contemporaneously published parallel guidance in Notice 2013-5413 and HHS issued 
guidance stating that it concurred in the application of the laws under its jurisdiction as set 
forth in the guidance issued by DOL, Treasury, and IRS.14  Subsequent guidance reiterated and 
clarified the application of the market reforms to HRAs and EPPs.15   
 
EPPs and HRAs typically consist of an arrangement under which an employer reimburses 
medical expenses (whether in the form of direct payments or reimbursements for premiums or 
other medical costs) up to a certain amount.  As explained in Technical Release 2013-03 and 
Notice 2013-54, EPPs and HRAs are group health plans that are subject to the group market 
reform provisions of the Affordable Care Act, including the prohibition on annual dollar limits 
under PHS Act section 2711 and the requirement to provide certain preventive services 
without cost sharing under PHS Act section 2713.  The 2013 guidance generally provides that 
EPPs and HRAs will fail to comply with these group market reform requirements because these 
arrangements, by their definitions, reimburse or pay medical expenses on the employees 
behalf only up to a certain dollar amount each year. 
                                                 
11 Technical Release 2013-03 is available at http://www.dol.gov/ebsa/newsroom/tr13-03.html. 
12 Section 1001 of the Affordable Care Act added new PHS Act sections 2711-2719.  Section 1563 of the Affordable 
Care Act (as amended by Affordable Care Act section 10107(b)) added Code section 9815(a) and ERISA section 
715(a) to incorporate the provisions of part A of title XXVII of the PHS Act into the Code and ERISA, and to 
make them applicable to group health plans and health insurance issuers providing health insurance coverage 
in connection with group health plans.  The PHS Act sections incorporated by these references are sections 
2701 through 2728.  Accordingly, these referenced PHS Act sections (i.e., the market reforms) are subject to 
shared interpretive jurisdiction by the Departments. 
13 2013-40 IRB 287.  Notice 2013-54 is available at http://www.irs.gov/pub/irs-drop/n-13-54.pdf. 
14 See Insurance Standards Bulletin, Application of Affordable Care Act Provisions to Certain Healthcare 
Arrangements, September 16, 2013, available at https://www.cms.gov/CCIIO/Resources/Regulations-and-
Guidance/Downloads/cms-hra-notice-9-16-2013.pdf. 
15 There have been several issuances on the topics addressed in the 2013 guidance: (1) FAQs About Affordable 
Care Act Implementation (Part XI), issued on January 24, 2013 by DOL (http://www.dol.gov/ebsa/faqs/faq-
aca11.html) and HHS (http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-
FAQs/aca_implementation_faqs11.html); (2) IRS Notice 2013-54 and DOL Technical Release 2013-03, issued on 
September 13, 2013; (3) IRS FAQ on Employer Healthcare Arrangements (http://www.irs.gov/Affordable-Care-
Act/Employer-Health-Care-Arrangements); (4) FAQs About Affordable Care Act Implementation (Part XXII), 
issued on November 6, 2014 by DOL (http://www.dol.gov/ebsa/faqs/faq-aca22.html) and HHS 
(http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/FAQs-Part-XXII-FINAL.pdf); (5) Notice 
2015-17, 2015-14 IRB 845, issued by Treasury and IRS on February 18, 2015; and (6) Notice 2015-87, 2015-52 
IRB 889, Q&A-1 to Q&A-6, issued by Treasury and IRS on December 16, 2015.  See also 26 CFR 54.9815-2711(d), 
29 CFR 2590.715-2711(d), and 45 CFR 147.126(d) (80 FR 72192, Nov. 18, 2015). 
4 
   
The 2013 guidance further provided that an HRA will not fail to meet the group market reform 
provisions of the Affordable Care Act when integrated with a group health plan that 
otherwise complies with those provisions under the integration methods described in that 
guidance.  On November 18, 2015, the Departments issued final regulations implementing PHS 
Act section 2711, which incorporate the general rule set forth in the 2013 guidance clarifying 
that an HRA or EPP cannot be integrated with individual market policies to satisfy the market 
reforms.16  
 
Q3:  The Cures Act, enacted on December 13, 2016, includes provisions allowing 
small employers to offer arrangements similar to an HRA or EPP that may be 
used to pay or reimburse for medical expenses, including coverage on the 
individual market.  How do these provisions of the Cures Act affect the 
Departments previous guidance regarding HRAs and EPPs? 
 
To address concerns raised by application of the group market provisions to certain 
arrangements of small employers, section 18001 of the Cures Act introduces a new type of tax-
preferred arrangement that small employers may use to help their employees pay for medical 
expenses  the qualified small employer health reimbursement arrangement (QSEHRA).  The 
Cures Act amends Code section 9831, ERISA section 733, and PHS Act section 2791, and 
provides that a QSEHRA is not a group health plan.     
 
Under the Cures Act, a QSEHRA is an arrangement offered by an eligible employer that meets 
the following criteria: 
(1) The arrangement is funded solely by an eligible employer, and no salary reduction 
contributions may be made under the arrangement;   
(2) The arrangement provides, after the employee provides proof of coverage, for the 
payment to, or reimbursement of, an eligible employee for expenses for medical care 
(as defined in Code section 213(d)) incurred by the eligible employee or the eligible 
employees family members (as determined under the terms of the arrangement);  
(3) The amount of payments and reimbursements described in (2) for any year do not 
exceed $4,950 ($10,000 in the case of an arrangement that also provides for payments 
or reimbursements for family members of the employee) (with amounts to be indexed 
for increases in cost of living); and 
(4) The arrangement is provided on the same terms17 to all eligible employees of the 
eligible employer. 
To be an eligible employer that may offer a QSEHRA, the employer may not be an applicable 
large employer (ALE) as defined in Code section 4980H(c)(2) (and thus may not be an employer 
that, generally, employed at least 50 full-time employees, including full-time equivalent 
                                                 
16  26 CFR 54.9815-2711(d), 29 CFR 2590.715-2711(d), and 45 CFR 147.126(d); See also 80 FR 72192, Nov. 18, 
2015. 
17 Certain variations are permitted if they are in accordance with the variation in the price of an insurance policy 
based on age or number of family members.  Code section 9831(d)(2)(C). 
5 
  employees, in the prior calendar year) and may not offer a group health plan to any of its 
employees. 
 
The Departments prior guidance concluded that EPPs and non-integrated HRAs are group 
health plans that fail to comply with the group market reform requirements that prohibit 
annual dollar limits under PHS Act section 2711 and that require the provision of certain 
preventive services without cost sharing under PHS Act section 2713.  Because a QSEHRA is 
statutorily excluded from the definition of a group health plan, the group market reform 
requirements do not apply to a QSEHRA.  With respect to EPPs and HRAs that do not qualify as 
QSEHRAs, the Departments prior guidance continues to apply. 
 
The statutory exclusion of QSEHRAs from the group health plan definition is effective for plan 
years beginning after December 31, 2016.  With respect to plan years beginning on or before 
December 31, 2016, the Cures Act provides that the relief under Notice 2015-1718 applies.  
Q&A 1 of Notice 2015-17 provides that the excise tax under Code section 4980D will not be 
asserted with respect to employers that are not ALEs for any failure to satisfy the market 
reforms by EPPs that pay, or reimburse employees for, individual health policy premiums or 
Medicare Part B or Part D premiums.  That relief was limited to periods before July 1, 2015.  
Employers eligible for that relief were not required to file IRS Form 8928 (regarding failures to 
satisfy requirements for group health plans under chapter 100 of the Code, including the 
market reforms) solely as a result of having such an arrangement for the periods prior to July 
1, 2015.   
 
Pursuant to the extension provided under the Cures Act, for plan years beginning on or before 
December 31, 2016, the excise tax under Code section 4980D will not be asserted for any 
failure to satisfy the market reforms by EPPs that pay, or reimburse employees for, individual 
health policy premiums or Medicare Part B or Part D premiums, with respect to employers 
otherwise eligible for the relief under Q&A 1 of Notice 2015-17.  Such employers are also not 
required to file IRS Form 8928 solely as a result of having such an arrangement for the plan 
years beginning on or before December 31, 2016. 
 
As noted in Q&A 1 of Notice 2015-17, the relief does not extend to stand-alone HRAs or other 
arrangements to reimburse employees for medical expenses other than insurance premiums.  
Consequently, the extension of the relief by the Cures Act is similarly limited to EPPs and does 
not extend to stand-alone HRAs or other arrangements to reimburse employees for medical 
expenses other than insurance premiums.  In addition, as an employer-provided group health 
plan, coverage by an HRA or EPP that is not a QSEHRA and that is eligible for the extended 
relief under the Cures Act would be minimum essential coverage.  Consequently, a taxpayer 
would not be allowed a premium tax credit under Code section 36B for the Marketplace 
coverage of an employee, or an individual related to the employee, who is covered by an HRA 
or EPP other than a QSEHRA.19  
 
                                                 
18  2015-14 IRB 845. 
19  See Code section 36B(c)(2)(C)(iii). 
6 
  Q&A 2 of Notice 2015-17 clarifies the treatment of certain S corporation healthcare 
arrangements for 2-percent shareholder employees, generally providing that, until additional 
guidance provides otherwise, taxpayers may continue to rely on Notice 2008-120 for all federal 
income and employment tax treatment of such arrangements, and that such arrangements will 
not be treated as failing to satisfy the market reforms.  As additional guidance with respect to 
these arrangements has not been issued, the guidance under Q&A 2 of Notice 2015-17 
continues to apply.  The Cures Acts extension of the relief under Notice 2015-17 to plan years 
beginning on or before December 31, 2016 does not modify Q&A 2 of Notice 2015-17, which 
continues to apply to such arrangements until additional guidance provides otherwise. 
 
As noted above, the Departments prior regulations and guidance continue to apply with 
respect to EPPs and HRAs that do not qualify as QSEHRAs, including such arrangements 
offered by employers that are not eligible employers as defined under the Cures Act.  An 
employer that is considered an applicable large employer as defined in Code section 
4980H(c)(2) is not permitted to offer a QSEHRA. 
                                                 
20  2008-2 IRB 1. 
7