Final rules were released by the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury addressing limited scope vision and dental benefits and employee assistance programs (EAPs) as excepted benefits. These regulations should be reviewed so that plans may make any necessary changes effective for plan years beginning on or after January 1, 2015.
Excepted benefits are generally excluded from the Affordable Care Act’s (ACA’s) requirements. There are four categories of excepted benefits:
- Benefits that are generally not health coverage (workers compensation, accidental death and dismemberment)
- Limited excepted benefits (some limited scope* vision or dental benefits, long-term care, home health care, health FSAs)
- Non-coordinated excepted benefits (coverage for a specific disease or illness, hospital indemnity insurance)
- Supplemental excepted benefits (Medicare Supplement plans)
*Limited scope means that benefits are limited to treatment of the eye (vision) or mouth (dental).
In December 2013, proposed rules were issued regarding excepted benefits. The rules proposed changes in the requirements affecting limited scope vision and dental coverage and recognition of both employee assistance programs and coverage that wraps around individual coverage as new forms of limited excepted benefits. The final rule is silent on wraparound coverage and makes minor modifications to the other proposals. Additional guidance on wraparound coverage is expected in the future.
Vision and Dental Benefits
The final rules clarify that limited scope vision and dental benefits are excepted benefits if they (1) are offered under a separate policy or insurance contract or (2) are not considered to be an integral part of the group health plan. These benefits are not an integral part of the group health plan if either (1) participants may decline coverage or (2) claims for the benefits are administered under a separate contract. The regulations eliminate the requirement that an additional premium be charged in order to qualify as an excepted benefit.
Employee Assistance Programs (EAPs)
The final rule also allows employee assistance programs to be recognized as excepted benefits if they:
- Do not provide significant medical care benefits.
- Do not coordinate their benefits with group health plan benefits.
- Do not require employee premiums or contributions for participation.
- Do not impose cost-sharing requirements.
These regulations apply to group health plans and group health insurance issuers for plan years beginning on or after January 1, 2015. Plans should review the regulations and determine that benefits have been designed and are being administered appropriately to meet the definition of excepted benefits. If these requirements are not met, plans may face additional compliance under HIPAA, Mental Health Parity and the ACA as well as potential penalties for noncompliance.