Benefits that are considered limited or ancillary to comprehensive health coverage are excepted from HIPAA’s portability and nondiscrimination requirements as well as many of the Affordable Care Act’s marketplace mandates and insurance reforms.
Under an initial set of regulations, fully-insured dental and vision benefits qualified as excepted benefits as long as they were offered under a separate insurance policy. In contrast, self‑insured dental and vision benefits were only considered excepted benefits if (1) participants could opt out of the coverage, and (2) participants who enrolled in the coverage were required to pay a separate premium or contribution for that coverage. Recognizing the inequity between the treatment of fully-insured and self-insured dental and vision benefits, the regulators issued proposed regulations published in the Federal Register on December 24, 2013 that level the playing field by removing requirement (2) in the preceding sentence. Under the proposed regulations, self-insured dental and vision benefits will qualify as excepted benefits as long as participants have the option to opt out of such benefits.
The proposed regulations also clarify the requirements for employee assistance plans (“EAPs”) to qualify as excepted benefits beginning in 2015. An EAP will constitute an excepted benefit as long as (1) the EAP does not provide “significant” benefits that consist of medical care, (2) the EAP benefits are not coordinated with benefits under another group health plan (e.g., participants are not required to exhaust EAP benefits before becoming eligible for benefits under the medical plan), (3) employees do not have to pay a premium to participate in the EAP, and (4) the EAP does not require cost sharing.
The regulators requested comments on how to define “significant” for this purpose.
Through the end of 2014 or until regulations are finalized, limited dental and vision benefits and EAPs that meet the conditions of the proposed regulations will be considered excepted benefits. If the final regulations are more restrictive than the proposed regulations, they will be effective, at the earliest, in 2015.