The Affordable Care Act ("ACA") and its regulations have been incorporated into the Puerto Rico Health Insurance Code, as amended, and guidance has been issued by the Office of the Insurance Commissioner to such effect. The Department of Health & Human Services ("HHS"), however, has recently clarified that the following requirements imposed under the ACA, will not apply to individual or group health insurance in the U.S. territories, including Puerto Rico: (i) guaranteed availability; (ii) community rating; (iii) single risk pool; (iv) rate review; (v) medical loss ratio; and (vii) essential health benefits.
For purposes of Title I of the ACA, the definition of "state" includes only the 50 States and the District of Columbia. It does not include the U.S. territories. However, previous to the HHS's clarification, it relied upon the definition of "state" outlined in the Public Health Services Act ("PHS Act") to enforce the new PHS Act requirements and funding opportunities provided under Title I of the ACA in U.S. territories, and that definition includes U.S. territories, such as Puerto Rico. As a result of such interpretation, health insurance markets in Puerto Rico may have been adversely affected.
After careful consideration of both the situation affecting the insurance markets and the interpretation of the statute, as applied to U.S. territories, the HHS has determined that the new provisions of the PHS Act enacted under Title I of the ACA are appropriately governed by the definition of "state" set forth in that Title, and therefore, these provisions do not apply to Puerto Rico or any other U.S. territories. Furthermore, the definition of "state" set forth in the PHS Act will apply only to PHS Act requirements prior to the enactment of the ACA , or subsequent provisions that do not include a separate definition of "state" (as in the case of the ACA).
On the other hand, the HHS has stated that this new interpretation applies only to health insurance that is governed by the PHS Act. Consequently, this interpretation will not affect the PHS Act requirements that the ACA incorporated into the Employee Retirement Income Security Act (ERISA)...