Regulatory Agencies Propose Expansion of “Excepted Benefits”

health care reform

By Linda Rowings
Chief Compliance Officer
United Benefit Advisors 

Group health plans must meet many requirements under the Patient Protection and Affordable Care Act (PPACA), the Health Insurance Portability and Accountability Act (HIPAA), the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code, etc.  The regulatory agencies have long recognized that it doesn’t make sense to apply all of these requirements to plans that provide health coverage that is limited in some way – these limited benefits are called “excepted benefits” and include things like stand-alone dental and vision plans, hospital indemnity policies and Medicare supplement policies.  In late December, the agencies released a proposed regulation that would expand the excepted benefits categories.

The proposed regulation would make it easier for a stand-alone dental or vision plan to be considered an excepted benefit, by removing the requirement for a separate premium for the stand-alone dental or vision coverage.  Among other things, removing the separate premium requirement should resolve concerns that a health reimbursement arrangement (HRA) that only provides dental and vision benefits could not qualify as an excepted benefit. 

Because employee assistance plans (EAPs) often provide some medical care (often in the form of counseling), many employers have asked for assurances that EAPs aren’t required to meet all of the group health plan requirements.  The proposed regulation provides a safe harbor, of sorts, for EAPs that provide insignificant medical care and which are free to employees.

Finally, the proposed regulation raises the possibility of a limited wraparound option for employers that want to supplement marketplace coverage for employees who elect that coverage rather than the employer-provided coverage because of affordability issues.  The wraparound would need to be provided to a limited number of employees, with most employees covered by a traditional employer-sponsored group health plan.

For additional information on the proposed regulation, click here.