In an “Eye on Washington” alert, payroll provider ADP explains that most employer health and welfare plans are subject to the Patient Protection and Affordable Care Act (ACA) insurance market reforms, such as the requirement to provide coverage to dependents up to age 26, the annual and lifetime limit prohibition, preventive care rules and ACA out-of-pocket limits. However, according to the text of the final rules, excepted benefits are generally exempt from the health reform requirements that were added to the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC) by the Health Insurance Portability and Accountability Act (HIPAA) and the ACA.
The final rules provide guidance about when certain dental, vision and long-term care benefits are considered excepted benefits and thus are not subject to the ACA insurance market reforms. Specifically, according to ADP’s alert, the final rules provide that limited scope dental, vision and long-term care benefits are considered “excepted benefits” if they are 1) provided under a separate insurance policy or 2) otherwise not an integral part of the group health plan.
The final rules eliminate the requirement that participants pay an additional premium or contribution in order for benefits to be excepted benefits; and under the final rules, plans that provide benefits that are not provided through separate insurance will be considered excepted benefits if participants may decline the coverage—e.g., the participant can opt out of coverage upon request, whether or not there is a participant contribution required for the coverage—or claims for benefits are administered under a contract separate from claims administration for any other benefits under the plan.
The final rules also provide that Employee Assistance Programs (EAPs)—which offer such benefits as referral services and short-term substance use disorder or mental health counseling, as well as financial counseling and legal services—can qualify as excepted benefits if they meet four criteria:
- An EAP cannot provide significant benefits in the nature of medical care;
- Benefits cannot be coordinated with benefits under another group health plan;
- No employee premiums or contributions are required as a condition of participation in the EAP; and
- There is no cost sharing under the EAP—for example, no charge to the employee for services under the EAP.
More information can be found on ADP’s website.
Text of the final rules is here.