This week we address dental and vision benefits.
Do the PPACA insurance market reforms apply to dental and vision benefits?
The new amendment requirements under PPACA (age 26 rule, preventive care, annual limits restrictions, etc.) apply to a “group health plan,” which is an employee welfare benefit plan that provides medical care. PPACA uses the definitions that were already existing in the HIPAA portability rules, which define “medical care” very broadly. However, the HIPAA portability rules do contain an exception for “limited scope” dental and vision coverage.
HIPAA regulations say that a dental or vision plan will meet this exception if they are provided under a separate policy, certificate, or contract of insurance or are otherwise not an integral part of the plan. The regulations go on to say that benefits will be considered “not an integral part of the plan” only if: (1) participants have the right to elect not to receive coverage for the benefits, and (2) if a participant elects coverage, the participant must pay an additional premium or contribution for that coverage.
Do dental and vision benefits that are “bundled” with medical benefits fall under the exception? For example, under our plan, when a participant elects medical, they also are electing dental and vision.
This may depend on whether the dental and vision coverage is insured or self-funded. If the dental and vision benefits are under separate insurance policies, they likely would fall under the exception. However, if they are self-funded (or insured, but not under a separate policy), the regulation requires that the participant must be able to separately elect to receive coverage, with corresponding difference in premiums or contributions.
Our dental coverage is automatic because it is "employer pay all" (although an individual could opt out). Would this coverage fall under the exception?
Again, this may depend on whether the dental and vision coverage is insured and offered under a separate policy. If it is insured under a separate policy, the coverage likely would fall under the exception. If not, the regulations technically require that, to fall under the exception, the participant be given a separate election and must pay additional premiums for that coverage.
The Agencies have issued a FAQ on this exception where they also suggest that plans must charge some amount in order for the exception to apply. The FAQ says, "[I]f a plan provides its dental (or vision) benefits pursuant to a separate election by a participant and the plan charges even a nominal employee contribution towards the coverage, the dental (or vision) benefits would constitute excepted benefits, and the market reform provisions would not apply to that coverage." Affordable Care Act Implementation FAQ Part II, Q&A-6 (found at www.dol.gov/ebsa).
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.