Excepted Benefits Final Rules Address Dental, Vision, but Punt on Wraparound

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By Phil Kushin

Sept. 26 — Final rules on health-care benefits exempt from market reforms instituted by two major federal laws provide criteria for dental, vision and long-term care benefits and employee assistance programs to qualify as excepted benefits, but they postpone addressing the issue of limited wraparound coverage that was the subject of sharp criticism of the proposed regulations.

The final rules (T.D. 9697, RIN 1545-BL90), issued Sept. 26, address one of four forms of excepted benefits: limited excepted benefits, which include, among other things, limited-scope vision or dental benefits and long-term care benefits.

Excepted benefits are generally exempt from market reforms that the Health Insurance Portability and Accountability Act and the Affordable Care Act added to the Employee Retirement Income Security Act, the Public Health Service Act and the tax code. These include such provisions as limits on pre-existing condition exclusions, prohibitions on health-status-based discrimination, guarantees on renewability of coverage and mental health coverage parity.

The final regulations are effective Dec. 1 and apply to group health plans and group health insurance issuers for plan years beginning on or after Jan. 1, 2015.

Eligibility for excepted benefits also doesn't preclude an inpidual from getting a premium tax credit to help pay for coverage in an ACA exchange, a factor that could be key for employers since they won't face penalties under the ACA employer mandate unless an employee got such a credit.

In the final rules, the departments of the Treasury, Labor and Health and Human Services said they finalized the proposed rules, issued Dec. 20 (see previous article), with only minor modifications.

Dental, Vision, Long-Term Care

With regard to limited-scope vision and dental benefits as well as long-term care benefits, the final rules stuck with the proposal to eliminate the requirement under HIPAA regulations that participants pay an additional premium or contribution for limited-scope vision or dental benefits to qualify as excepted benefits.

The departments said the final regulations clarify that the benefits don't have to be offered in connection with a separate offer of major medical or “primary” group health coverage under a plan “to meet the statutory criterion that such benefits are ‘otherwise not an integral part of the plan.' ”

The final rules state that vision, dental or long-term care benefits can qualify as excepted benefits if they meet one of two criteria: participants in an employer's primary health-care plan are allowed to decline the benefits or the claims for the benefits are administered under a separate contract from claims administration for any other benefits under the plan.

Employee Assistance Programs

The final rules largely kept the four criteria for employee assistance programs the same as in the proposed regulations.

Those are:

  • they don't provide significant benefits in the nature of medical care,
  • their benefits can't be coordinated with the benefits under another group health plan,
  • they can't require employee premiums or contributions as a condition of participation, and
  • they can't impose cost-sharing requirements.
Wraparound Coverage

In the final rules, the departments said they were postponing addressing limited wraparound coverage, saying they still intend to publish regulations on the matter, “taking into account the extensive comments received on this issue.”

In comments on the proposed rules, employee benefits, business and medical groups said the provisions on wraparound coverage wouldn't benefit workers who will most need such supplemental coverage: those who will go to the ACA marketplaces for health insurance because either their employer dropped coverage or they aren't eligible for or can't afford the employer-provided coverage (see previous article).

The U.S. Chamber of Commerce and America's Health Insurance Plans went further, saying the federal government should withdraw this part of the proposal.

Wraparound coverage supplements core coverage and, in the health-care context, might provide such things as extra benefits, broader networks or cost-sharing reductions.

The final regulations are effective Dec. 1 and apply to group health plans and group health insurance issuers for plan years beginning on or after Jan. 1, 2015. They are scheduled to be published in the Federal Register on Oct. 1.

To contact the reporter on this story: Phil Kushin at pkushin@bna.com

To contact the editor responsible for this story: Sue Doyle at sdoyle@bna.com