The ACA is not available in Paradise?

The US Virgin Islands have been part of the United States since 1917. The United States took possession of the islands on March?31, 1917, and the territory was renamed the Virgin Islands of the United States. But today, this is the only part of the United States of America that is not regulated under the Affordable Care Act.

According to the Public Health Service Act (PHS Act). It is noted that the definition of "state" for new PHS Act requirements and funding opportunities is included in Title I of the Affordable Care Act. Thus, under this definition, the new market reforms in the PHS Act apply to the territories including the residents and businesses of the US Virgin Islands.

If you live in the USVI, you do not get a Premium Tax Credit, and health insurance carriers do not market individual plans. Is this a potential loophole or more importantly, what is the impact on the local citizens?

Today, there is no managed care on the islands, but clinics and regional medical centers, and many residents pay cash when seeking services. What if you need to go to a facility on the mainland? What if it's an emergency? What does one do about health insurance living in paradise?

The Problem

In 2016, this issue started with a letter to CMS by the Office of the Lieutenant Governor Division of Banking & Insurance in St. Croix. CMS was instrumental in reviewing this quickly and accurately. The issue was that "the federal interpretation is undermining the stability of the territories' health insurance markets."

The response provided by CMS was a direct answer to the problem.

"After a careful review of this situation and the relevant statutory language, HHS has determined that the new provisions of the PHS Act enacted in title I are appropriately governed by the definition of "state" set forth in that title, and therefore that these new provisions do not apply to the territories. This means that the following Affordable Care Act requirements will not apply to individual or group health insurance issuers in the U.S. territories:1 guaranteed availability (PHS) Act section 2702), community rating (PHS Act section 2701), single risk pool (Affordable Care Act section 1312(c)), rate review (PHS Act section 2794), medical loss ratio (PHS Act section 2718), and essential health benefits (PHS Act section 2707). Specifically, under this interpretation, the definition of "state" set forth in the PHS Act will apply only to PHS Act requirements in place prior to the enactment of the Affordable Care Act, or subsequently enacted in legislation that does not include a separate definition of"state" (as the Affordable Care Act does).

The Centers for Medicare & Medicaid Services (CMS) intends to issue regulations to affirm this interpretation and eliminate any text in the existing rules that is inconsistent with this interpretation (e.g., the definition of"state" that includes territories set forth in the rate review regulations at 45 CFR 154.1 02). Pending the completion of such rulemaking, CMS will apply this interpretation and will not subject health insurance issuers in the territories to the Affordable Care Act requirements at issue. Because this interpretation applies prospectively, territories will not have to pay back to the federal government any grants that have been spent by the territories as of the date of this letter, such as those provided for rate review (section 2794 of the PHS Act) and for consumer assistance (section 2793 of the PHS Act). However, all unspent grant funding must be returned to CMS, because the interpretation of the law making the territories eligible to expend such funds is no longer in place."

"FOOTNOTE: Our analysis applies only to health insurance that is governed by the PHS Act. It does not affect the PHS Act requirements that were enacted in the Affordable Care Act and were incorporated into the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (Code) and apply to group health plans (whether insured or self-insured), because such applicability does not hinge on, or rely upon the term "state" as it is defmed in either the PHS Act or in the Affordable Care Act. Similarly, it also does not affect the PHS Act requirements that were enacted in the Affordable Care Act and apply to non-federal governmental plans. As a practical matter, therefore, PHS Act, ERISA, and Code requirements applicable to group health plans continue to apply to such coverage and issuers selling policies to both private sector and public sector employers in the territories will want to make certain that their products comply with the relevant Affordable Care Act amendments to the PHS Act applicable to group health plans since their customers-the group health plans- are still subject to those provisions. Group health plans remain subject to those provisions of the PHS Act that were enacted in the Affordable Care Act, including, inter alia, the prohibition on lifetime and annual limits (PHS Act section 2711), the prohibition on rescissions (PHS Act section 2712), coverage of preventive health"

In an area of the United States, that many call "Paradise", the cost of health care is still an issue for every resident. And there is no "sufficient competition in their health insurance markets to provide its residents with a diverse selection of affordable health insurance plans."need

Medical Evacuation & Emergency

In today's health insurance options, under the Affordable Care Act, many people are alive today, thanks to air ambulance services, in case of emergency. These services are coded under "emergency" and covered under most plans. The residents of the USVI have the need for air ambulance services, just like the American citizens in Hawaii. The sudden trip could instantly create a financial burden on top of a medical emergency.

In many cases, residents and employees of US-based companies located in the US Virgin Islands were worried about the cost of health care in case of emergency. While they felt ok with the preventative care offered by the local providers and the regional medical center, there was still a worry that it was not something that concerned other Americans and employees of US-based companies living in the "mainland" of the United States.

In 2023, The ICHRA Shop (www.ichra.shop) uncovered the issue of an employer transitioning to ICHRA. How does a US-based company offering ICHRA address employees in the USVI a,s there are no "ACA" plans marketed, and citizens cannot go to the Health Exchange for coverage with a USVI address?

The Solution - Locals Solving Health Care

In 2017, the locals of the USVI were quietly left out of the national discussion of the ACA, but locally, a group has since banded to find solutions for the residents, offering a "homegrown " solution that meets their needs.

A group of experts looking at the healthcare situation created a "captive" product that today is meeting the needs of the residents. The group looked closely at the key components of health insurance from the consumer's lens. They were not constrained by the regulatory needs that traditional health plans encounter using the ACA Calculator. This approach of designing health care plans that are important to the end user is an essential topic as the cost can be contained by a unique plan design and is not regulated to use the medical loss ratio that all American insurance carriers are subject to.

By creating scaled benefits, allowing you to insure the basics,that or buy up for items such as Kidney Dialysis or Cancer Care, Telehealth, and addressing the geographic issues surrounding emergency care, residents can purchase a plan that includes an air ambulance. There is "medical underwriting," and that is one area that makes a critical difference for people looking at the coverage can be denied for pre-existing conditions.

These are not, however, "ICHRA qualified" plans, and employers mustn't mistake these plans or other non-regulated plans and offer them as part of an ICHRA.

As the regulations note, the other federal regulations, before to the enactment of the ACA, are still in place. That allows employers to offer an HRA contribution or Cash in lieu of Coverage to employees. Providing a taxable contribution to the employees to use for purchasing health insurance or other items is an easy solution. However, the employer cannot mandate the money issued for purchases used for purchasing to choose the care they need freely in health insurance. But today, extra money allows employees to choose the care they need freely.

"To solve healthcare nationally, we must first solve healthcare locally."

Today, as we approach the election, with health insurance being a key topic, we pause and look at bipartisan solutions that are working. Credit to the past regulations that were created to form the Health Reimbursement Accounts (HRA's), Health Savings Accounts (HSA's), Qualified Small Employer Health Reimbursement Accounts (QSEHRA's) and today, the Individual Coverage Health Reimbursement Accounts (ICHRA's). Also, credit needs to be given to the team at CMS, who is always working hard to do the right thing from my perspective.

By getting involved, each small business and person in America can work closer to solving health insurance issues in their community. Focus groups start to solve the problem, getting the providers and hospitals in the same room as insurance executives, community business owners and governmental officials and talking about solutions is the start of how we can solve the health insurance crisis.

Even if you dream of living on a remote island, you still need health insurance and access to healthcare. Fortunately, with the work of the local community, insurance consultants and federal regulators, a temporary solution has been created in the US Virgin Islands, and more work is being done today to help the "other" American citizens have the advantages of the Affordable Care Act.

I will also take this assignment on personally, as who does not want to hang out in paradise for a while anyway.

Brad O'Neill (aka The Wizard of ICHRA) is the Co-founder and Managing Partner of The ICHRA Shop (www.ICHRA.shop), where he leads consultations with large employers, brokers and consultants on the advantages of HRA's and ICHRA's.

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