This week’s question:
Do the plan design changes required under the Patient Protection and Affordable Care Act (PPACA) apply to dental and vision plans? What about limited benefit or “mini-med” policies?
Generally, the “insurance market reform” provisions of PPACA, such as the prohibition on annual & lifetime limits, requirement to cover dependent children to age 26, and prohibition on pre-existing condition exclusions for enrollees under age 19 (all of which apply to both insured and self-funded plans), apply to “group health plans,” which are defined as employee welfare benefit plans providing medical benefits. These provisions amended the HIPAA portability provisions of the Public Health Service Act (PHSA), which already contained several exceptions (often referred to collectively as “excepted benefits”). These include:
- Listed Excepted Benefits – Accident coverage, disability income coverage, liability insurance, supplements to liability insurance, workers’ compensation and similar coverage, automobile liability insurance, credit-only insurance (including mortgage insurance), and coverage for on-site medical clinics.
- Limited Scope Benefits – Benefits that are not an integral part of a group health plan. Examples of these benefits include limited-scope dental and vision benefits for which a separate election must be made and long-term care benefits provided under a separate policy.
- Noncoordinated Benefits – Benefits that are provided only for a specified disease or illness, or any fixed indemnity insurance (for example, paying a set dollar amount per day of hospitalization). The benefits must be provided under a separate policy with no coordination between the policy and a group health plan maintained by the same sponsor.
- Supplemental Benefits – Medicare supplemental insurance or similar supplemental coverage provided under a separate policy, certificate, or contract of insurance.
While there arguably are some drafting errors in some of these provisions, PPACA appears to retain the exceptions listed above with respect to the insurance market reform requirements. So, many vision and dental plans will be excluded from these new requirements if they fall under the “limited scope” benefits exception. Many limited or “mini-med” policies (which typically provide coverage for a schedule of procedures up to an annual maximum for each procedure), would not fall under one of the above exceptions and would have to comply with the new rules. (This can be particularly problematic for mini-med policies that contain annual maximums, which will be limited under PPACA.)
Note that PPACA did remove the previously available exception under the PHSA for small employer plans (of less than two employees), which has called into question whether these insurance market reforms would apply to retiree-only plans (some retiree-only plans had relied on this exception for HIPAA portability purposes before health care reform – we are expecting more guidance on this issue). Also, the excepted benefits listed above do not extend to other areas of PPACA, such as the employer mandates that require employers to pay a penalty if they do not provide sufficient coverage or the tax provisions (including the HRA, HSA, and FSA changes). Each major section of the legislation has different definitions and exceptions. Plans must look to each provision on its own to determine scope and applicability.
Got a health-care reform question? You can ask YOUR health-care reform legislation question online at http://www.surveymonkey.com/s/second_opinions
You can find a handy list of Key Provisions of the Patient Protection and Affordable Care Act and their effective dates at http://www.groom.com/HCR-Chart.html
Christy Tinnes is a Principal in the Health & Welfare Group of Groom Law Group in Washington, D.C. She is involved in all aspects of health and welfare plans, including ERISA, HIPAA portability, HIPAA privacy, COBRA, and Medicare. She represents employers designing health plans as well as insurers designing new products. Most recently, she has been extensively involved in the insurance market reform and employer mandate provisions of the health-care reform legislation.
Brigen Winters is a Principal at Groom Law Group, Chartered, where he co-chairs the firm’s Policy and Legislation group. He counsels plan sponsors, insurers, and other financial institutions regarding health and welfare, executive compensation, and tax-qualified arrangements, and advises clients on legislative and regulatory matters, with a particular focus on the recently enacted health-reform legislation.
PLEASE NOTE: This feature is intended to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.
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