The Obama administration issued final regulations amending guidance on excepted benefits under the Affordable Care Act to include limited wraparound coverage provided certain requirements are met.
The final rules (T.D. 9714, RIN 1210-AB70, RIN 0938-AS52), issued March 16 by the departments of the Treasury, Labor, and Health and Human Services, said that limited wraparound coverage must provide meaningful benefits beyond cost sharing, which may include reimbursing for the entire cost of primary care, cost of prescription drugs “not on the formulary of the plan,” 10 visits to a physician a year and access to on-site clinics at no additional cost.
The final rules also set out two pilot programs for providing limited wraparound coverage, one allowing for wraparound benefits under the health insurance marketplace's Multi-State Plan program and the other permitting wraparound coverage for part-time workers enrolled in an individual policy or in basic health plan coverage for “low-income individuals.”
On Dec. 19, Treasury, the DOL and the HHS issued proposed rules (REG-132751-14, RIN 1545-BM44) that would allow employers to offer employees limited wraparound health-care coverage in a pilot program as excepted benefits.
Excepted benefits are generally exempt from market changes that the ACA and the Health Insurance Portability and Accountability 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.
Limited in Amount
In addition to providing meaningful benefits beyond cost sharing, the limited wraparound coverage must be limited in amount, according to the guidance.
The final rules changed the requirements from the proposed rules, saying the coverage must be the greater of the maximum permitted annual salary reduction toward a health flexible spending account or “a percentage of the cost of coverage under the primary plan,” which was set at 15 percent in prior guidance.
The maximum permitted salary reduction for a health FSA was $2,500 in 2014 and will be “indexed in the manner prescribed under section 125(i)(2) of the Code,” which amounts to $2,550 for 2015, the final rules said.
The final rules adopted the three requirements set out in the proposed rules on the nondiscrimination requirement the limited wraparound coverage must meet, which included not imposing a pre-existing condition exclusion and not discriminating against individuals for eligibility, benefits or premiums. In addition, the limited wraparound coverage and the primary group health coverage can't discriminate in favor of highly compensated individuals and can't fail to be excludable from income with respect to any individual because of the application of tax code Section 105(h), the guidance said.
Excerpted from a story that ran in Pension & Benefits Daily (03/16/2015).
Stay on top of the latest industry trends and news coverage with a free trial to the Benefits Practice Resource Center.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)