Three federal agencies have issued proposed regulations to expand the definition of “excepted benefits” under federal law. Excepted benefits include benefits that are not an integral part of a group health plan, including limited scope dental and vision plans and Employee Assistance Programs. They are referred to as “excepted benefits” because they are exempt from the portability requirements added to Employee Retirement Income Security Act (ERISA) under the Health Insurance Portability and Accountability Act as well as several provisions added by the Affordable Care Act (ACA).
The proposed regulations include an important clarification for self-funded employer plans. Formerly, dental and vision benefits provided under a self-insured group health plan would qualify as excepted benefits only if participants had the right to elect not to receive the benefit and they had to pay an additional contribution for the coverage. The proposed regulations eliminate the requirement that participants pay an additional premium or contribution for limited-scope vision or dental benefits in order for such benefits to qualify as excepted benefits. The change means that limited-scope dental and vision benefits provided under a self-insured plan will be considered excepted benefits if participants have the right to elect not to receive such coverage.
In addition, the proposed regulations add “wraparound coverage” to the list of recognized excepted benefits. Under this provision, employers can provide some level of health benefits to employees that opt out of an employer-sponsored health plan in order to purchase health coverage on the exchange via affordability exemptions. The wraparound coverage may provide access to additional health providers or certain health benefits up to the level provided by the employer. The proposed rule outlines the criteria for providing wraparound coverage that, as an excepted benefit, would not disqualify an employee from being eligible for a premium tax credit.
And finally, the proposed rule set forth three criteria that employers can use to determine if their EAP qualifies as an excepted benefit, to be further clarified in final regulations:
- The EAP cannot provide significant medical care benefits, and the departments requested comments on how those should be defined;
- The EAP benefits cannot be coordinated with benefits provided under a group health plan;
- No employee contributions can be required to participate in the EAP, and there is no cost sharing permitted.
The Alliance does not provide legal advice. If you have questions about your plan’s compliance with these requirements or how to implement them, we encourage you to contact your attorney.
Updated March 10, 2014