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Thursday, January 26, 2012

Enforcement of Private Health Insurance Market Reforms Under the Affordable Care Act (PPACA)

Jennifer Staman
Legislative Attorney

The Patient Protection and Affordable Care Act (PPACA or ACA), as amended to date, greatly expanded the scope of federal regulation over health insurance provided through employmentbased group health coverage, as well as coverage sold in the individual insurance market. Federal health insurance standards created by ACA require an extension of dependent coverage to age 26 if such coverage is offered; the elimination of preexisting condition exclusions; a bar on lifetime annual limits on the dollar value of certain benefits; a prohibition on health insurance rescissions except under limited circumstances; and coverage of preventive health services without costsharing, among many other things. While some of these changes took effect in 2010, others are scheduled to begin in 2014. ACA does not expressly include any means for enforcing these new health insurance standards, although these new standards were added to Title XXVII of the Public Health Service Act (PHSA), and incorporated by reference into Part 7 of the Employee Retirement Income Security Act (ERISA) and Chapter 100 of the Internal Revenue Code (IRC). However, if these standards are not followed, enforcement may be carried out through mechanisms (such as judicial review and other penalties) that existed prior to ACA in these three federal statutes.

The IRC, the PHSA, and ERISA apply to different types of private health insurance coverage and contain different types of enforcement mechanisms. ERISA applies to group health coverage provided by private-sector employers. Section 502(a) of ERISA authorizes various civil actions that may be brought by a participant or beneficiary of a plan against both group health plans and health insurers. In general, the private health insurance requirements of Title XXVII of the PHSA apply to health insurers offering group and individual health coverage, as well as health plans offered to government employees. With respect to health insurers, the PHSA allows states to be the primary enforcers of the private health insurance requirements, but the Secretary of Health and Human Services (HHS) assumes responsibility for enforcing them with respect to governmental plans. Chapter 100 of the IRC applies to group health coverage, and the Department of Treasury can enforce the health plan requirements through the imposition of an excise tax. This report examines these provisions in ERISA, the PHSA, and the IRC that could be used to enforce new ACA health insurance standards.

In addition, ACA provides that, beginning in 2014, each state, or if a state fails to do so, the Secretary of HHS, must establish at least one American Health Benefit Exchange that facilitates the purchase of individual and group health insurance plans from insurers. ACA’s new federal health insurance standards appear to apply to health insurers both inside and outside an exchange. However, insurers that offer coverage through an exchange will be subject to additional requirements. This report will also briefly address enforcement of health coverage offered through an exchange.

Date of Report: January 1
2, 2012
Number of Pages:
Order Number: R4
Price: $29.95

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