Section 2714 of the Public Health Service Act (PHSA), as amended by PPACA, provides generally (and in part) that a group health plan or issuer that makes available dependent coverage of children must make such coverage available for children until attainment of 26 years of age. PPACA also makes conforming amendments to the “HIPAA” group health plan requirements in the Code and ERISA.
The insurance market reforms in PPACA (including the age 26 child coverage requirement) preserved the HIPAA scheme whereby “excepted benefits” are exempt from the PHSA, Code and ERISA group health plan requirements (including the new PPACA insurance market reforms). Excepted benefits include, among other things, limited-scope dental and vision benefits, if offered separately.
Treasury regulations generally define limited-scope dental or vision benefits for this purpose as dental or vision benefits that either are:
(1) offered under a separate policy, certificate or contract of insurance, or
(2) otherwise not an integral part of the group health plan.
To satisfy the second requirement – i.e., for dental or vision benefits to not be considered an integral part of the plan — participants must both (a) be given a separate election not to receive the dental/vision coverage, and (b) if the participant elects to receive coverage for the benefits, the participant must pay an additional premium or contribution for that coverage.
The DOL, IRS and HHS recently issued a FAQ on this issue that confirms that if a plan requires a separate election and “charges even a nominal employee contribution towards the coverage,” the dental or vision benefits would be excepted benefits that are not subject to the insurance market reforms. Thus, if dental and vision benefits are not offered pursuant to a separate election under which the participant is charged some additional contribution toward the cost of the dental and vision coverage, those benefits would be subject to the age 26 adult child coverage requirement.
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Contributors:
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.