The final regulations established to define “exception benefits” for group health care plans have been adjusted in light of new Affordable Care Act (ACA) standards, set to be implemented January 1, 2015. The Health Insurance Portability and Accountability Act’s (HIPPA) regulations do not apply to exception benefits. Exception benefits cannot be part of an integral group health plan. They may not be obtained under the same group health plan, policy, certificate, or contract as the integral benefits.
The following has been finalized on excepted benefits:
- Self-Insured plans can cover dental and vision benefits without additional premium cost.
- Employee Assistance Programs (EAP) for physical and mental health care and wellness are now qualified as excepted benefits under certain circumstances.
- EAPs with very limited coverage may make the employee ineligible to receive a premium tax credit if they enrolled in QHP coverage through an Exchange.
- “Wraparound” coverage qualifies as excepted benefits if an employee would potentially receive these benefits were they able to afford the group health plan premium. Since they cannot afford the group plan premium, they cannot enroll in the employer-sponsed plan to reap the benefits.This allows employers to provide employees with overall coverage that is comparable to the group health care plan coverage.
The Health Insurance Portability and Accountability Act provides the following definitions to further clarify what are excepted benefits for group health care plans:
- Benefits that are not health coverage are not excepted benefits. Therefore, excepted benefits do not include automobile insurance, liability insurance, workers’ compensation, accidental death and disbursement coverage.
- Limited Excepted Benefits include limited scope vision or dental benefits, long term care benefits, nursing home care, home health care, or community based care benefits.
- Under certain circumstances, a Health Flexible Spending Arrangement may qualify as limited excepted benefits.
- Non-coordinated Excepted Benefits cover a specific illness or disease and hospital indemnity or another type of fixed indemnity insurance.
- Supplemental Excepted Benefits must be supplemental to Medicare or CHAMPVA/TRICARE and must be provided under a separate policy, certificate, or contract of insurance.
2013 proposed regulations on limited exception benefits simplified the requirements to qualify if the excepted benefits are provided under a separate policy, certificate, or contract of insurance and are not an integral part of a group health plan:
- Limited-scope vision or dental benefits now qualify as excepted benefits.
- Employee Assisted Health Care, individual health care plans, and wrap around coverage are now recognized as limited excepted benefits in certain circumstances.
The final regulations on exception benefits eliminate the requirement that participants pay a premium or contribution. Because of this, an individual is now eligible to receive a premium tax credit if they enrolled in QHP coverage through an Exchange in most circumstances.
Benefits fall under the category of “not integral to the health plan” if participants have the right to elect not to receive coverage, and if they pay an additional premium or contribution for them.
- Participants must be able to decline coverage.
- Benefit claims must be administered under a separate contract from other benefits under the plan
The Departments of Labor, Health and Human Services, and Treasury want to prevent employers from shifting primary coverage to a separate “EAP plan” because it may exempt existing consumer protection provisions.
To further clarify, an EAP constitutes as excepted benefits if:
- The EAP does not provide significant health care benefits.
- The EAP’s benefits are not coordinated with benefits under another group health plan and cannot be financed by another group health plan.
- No employee premiums are required for participation and cost sharing requirements may not be imposed.
If you have any questions regarding “excepted benefits” or how health care reform affects your company, contact ERM Insurance Brokers at (949) 222-0444.