The Community Living Assistance Services and Supports (CLASS) Act was created as part of PPACA, as enacted in March 2010. The purpose of the CLASS Act was to establish a national voluntary long-term care insurance program for purchasing community living assistance services. Employers were expected to help facilitate the program by allowing employees to contribute through wage deductions. In October 2011, HHS announced that it was halting implementation of the CLASS Act due to solvency and actuarial challenges. The CLASS Act was formally repealed as one of the provisions of the American Taxpayer Relief Act of 2012, which President Obama signed into law on Jan. 2, 2013.
American Taxpayer Relief Act of 2012, Pub. L. No. 112-240 (Jan. 2, 2013), Section 642 (Page 46)
On Jan. 14, 2013, HHS issues proposed regulations and a fact sheet relating to processes for state exchanges to verify employer-sponsored health coverage. As background, individuals who are enrolled in or eligible for employer-sponsored coverage that meets affordability and minimum value standards are ineligible to receive advance payments of a premium tax credit or cost-sharing reductions through a state health insurance exchange. The proposed regulation includes detail on the procedures for the state exchange to verify access to employer-sponsored coverage. This is important for employers because a full-time employee receiving the tax credit through the exchange may trigger a penalty tax under the employer mandate (effective in 2014).
Generally, an applicant must submit specific information to the exchange when applying to receive advance payment of the premium tax credit, and the exchange must somehow verify that information and determine whether the individual is eligible. According to the proposed regulations, exchanges will obtain verification data from publicly available sources and records of the Small Business Health Options Program (SHOP) operating in the same state as the exchange (which will presumably already have access to this information). While the exchanges will generally be allowed to rely on the individual’s attestations as to the truthfulness of the information, if verification from public sources or SHOP records is not possible (or if the verification conflicts with the individual’s attestations), the exchange must undertake a manual verification process for a random sample of applicants. This manual verification process requires the exchange to make efforts to contact the employer identified by the applicant to determine whether the applicant is enrolled in – or is eligible for affordable, minimum value coverage under – an employer-sponsored plan. Notably, an exchange can choose to have HHS conduct the verification process.
Existing regulations (issued in 2012) require the exchange to notify an employer if an employee is determined eligible for advance payment of the premium tax credit, with notice of the employer’s right to appeal the determination. The proposed regulations describe a detailed appeals process, as well as an appeals process for employers and employees who are denied eligibility to purchase coverage through a SHOP.
Finally, HHS has indicated that it is developing a one-page template that employers could obtain from the exchange website. The template could be used by the employer to provide information about its health coverage. Then, the employee could attach the completed template to the exchange applications, providing pre-enrollment verifications with respect to employer-sponsored coverage.