The Affordable Care Act applies to health plans, excluding plans that provide “excepted benefits.” The government recently proposed rules expanding what coverage classifies as a benefit that is excepted from health care reform.
Prior to the changes, dental and vision coverage was an excepted benefit if the coverage was offered under a separate policy that did not include medical coverage or if employees could elect the coverage separately and had to pay for the coverage separately.
Under new proposed rules, dental and vision coverage will be considered an excepted benefit and not subject to health care reform if
- The coverage is insured under a policy that does not include medical coverage; and
- Employees can elect the coverage separately, whether they have to make a contribution for the coverage or not.
This means that dental and vision coverage may be considered excepted from health care reform requirements even if employees do not have to make a separate contribution for the coverage.
The proposed rules confirm that an employee assistance plan (EAP) is excepted from health care reform so long as employees don’t have to pay for the EAP, the EAP does not provide medical benefits, the EAP benefits do not include copays or coinsurance, and eligibility for the EAP does not depend on enrolling in another health plan.
The proposed regulations also address a new excepted benefit known as “wrap around” coverage that may be available beginning in 2015. This coverage would supplement individual health plans purchased by employees who opt-out of the employer-provided medical plan. To be an excepted benefit, the wraparound coverage would have to be offered to an employee who has non-grandfathered individual health coverage (generally coverage purchased through the Exchange) and the coverage would have to be designed to cover benefits not covered through the individual coverage, such as non-essential health benefits. The employer would have to also offer a separate health plan that provides minimum value, and the employee with the wraparound coverage would have had to opt out of that coverage. The cost of the wraparound coverage cannot exceed 15% of the cost of the medical plan.
Employers should review their health plan offerings and may find that some plans are now excepted under health care reform.
