FAQ A C A
S ABOUT THE  FFORDABLE  ARE  CT 
I  P III 
MPLEMENTATION    ART 
 
October 12, 2010 
 
 
Set out below are two Frequently Asked Questions (FAQs) regarding implementation of the market 
reform provisions of the Affordable Care Act.  They have been prepared jointly by the Departments of 
Health and Human Services, Labor and the Treasury.  Like the FAQs issued on September 20, 2010 and 
on October 8, 2010, these FAQs answer questions from stakeholders with a view to helping people 
understand the new law and benefit from it, as intended.  
 
The Departments anticipate issuing further responses to questions and other guidance under the 
Affordable Care Act in the future.  We hope these publications will be helpful by providing additional 
clarity and assistance.  
 
EXEMPTION FOR GROUP HEALTH PLANS WITH LESS THAN TWO CURRENT EMPLOYEES 
 
Q1:  Do the HIPAA statutory exemptions in effect since 1997 for group health plans with 
less than two participants who are current employees apply to the Affordable Care 
Acts group market reforms? 
 
Yes.  The preamble to the interim final regulations on grandfathered plans1 noted that statutory 
provisions in effect since 1997 exempting group health plans with less than two participants who are 
current employees from HIPAA also exempt such plans from the group market reform requirements of 
the Affordable Care Act.  Accordingly, under the terms of these statutory provisions, group health plans 
that do not cover at least two employees who are current employees (such as plans in which only 
retirees participate) are exempt from the Affordable Care Act's market reform requirements.   
 
Q2:  I am an employer who sponsors a number of plans including one for both my 
retirees and individuals on long-term disability.  Before the Affordable Care Act, we 
treated our plan covering retirees and those on long-term disability as exempt under 
HIPAA.  Can we continue to treat that plan as exempt?    
 
The Departments have not issued guidance on this specific issue.  In order to fully analyze the issue, 
and balance the goal of ensuring that the Affordable Care Acts market reforms and patient protections 
are provided to eligible enrollees of group health plans with the goal of preventing disruption of 
existing coverage, the Departments will be issuing a request for information (RFI) very soon.  The RFI 
will solicit comments from employers and other stakeholders to inform future guidance.  After 
reviewing the comments submitted, the Departments intend to publish guidance on this issue in 2011.   
  
                                                            
1 See 75 FR 34539-34540, published June 17, 2010.   
Until guidance is issued, the Departments will treat plans described above as satisfying the exemption 
from HIPAA and the Affordable Care Acts group market reforms for plans with less than two 
participants who are current employees.  To the extent future guidance on this issue is more restrictive 
with respect to the availability of the exemption than this interim relief, the guidance will be 
prospective, applying to plan years that begin some time after its issuance.   
 
Pending such further guidance, a plan may adopt any or all of the HIPAA and Affordable Care Act market 
reform requirements without prejudice to its exemption.  The Departments encourage such voluntary 
compliance.