DOL, HHS and IRS
have jointly issued final regulations amending those originally
promulgated under the Health Insurance Portability and Accountability
Act ("HIPAA") regarding the classification of limited-scope
dental and vision benefits as excepted benefits. The final
regulations also expand the definition of excepted benefit to cover
certain employee assistance programs ("EAPs"). Notably,
these excepted benefits are exempt from meeting certain PPACA
requirements that apply to group health plans and other health
Background. Excepted benefits are benefits that are considered
limited or ancillary to comprehensive group health coverage. Notably,
excepted benefits are exempt from HIPAA's portability and
nondiscrimination requirements as well as other legislative mandates
such as mental health parity and PPACA's marketplace mandates and
insurance reforms. (This includes PPACA's restrictions on annual and
lifetime limits and the requirement that preventive services be
provided with no cost sharing.) Individuals with excepted benefits
may enroll in health insurance coverage through one of PPACA's Health
Insurance Marketplaces and obtain premium tax credits to pay for such
Dental and Vision
Benefits. To qualify as
excepted benefits, limited-scope dental and vision benefits must not
be deemed as being an integral part of a group health plan. Under the
final regulations, vision and dental benefits are not considered to
be an integral part of a group health plan if participants may
decline coverage or if claims for the benefits are administered under
a separate contract from other group health plan benefits.
regulations explain that limited-scope dental and vision coverage
need not be offered separately from the plan providing group health
coverage in order to qualify as excepted benefits. In addition, the
final regulations clarify that participants need not pay an
additional premium or contribution for limited-scope dental or vision
benefits to qualify as an excepted benefit.
EAPs. The final regulations amend current regulations to
include EAPs that meet certain conditions as excepted benefits. The
final regulations provide that for an EAP to be considered an
excepted benefit, it cannot:
- Provide significant benefits in the natue
of medical care.
- Be coordinated with the group health
- Require any employee premiums or
contributions as a condition for participation.
- Impose cost-sharing requirements.
whether an EAP provides significant benefits in the nature of medical
care, the amount, scope and duration of the covered services are to
be taken into account. For example, an EAP that provides only
limited, short-term outpatient counseling for substance abuse
disorders (without covering inpatient, residential, partial
residential or intensive outpatient care) without requiring prior
authorization or review for medical necessity does not provide
significant benefits. Conversely, an EAP that provides disease
management services (such as laboratory testing, counseling and
prescription drugs) for individuals with chronic conditions, such as
diabetes, does provide significant benefits.
Effective Date. The final regulations apply to group health plans for
plan years beginning on or after January 1, 2015.
Action Steps. Employers that offer limited-scope dental or vision or
EAP benefits are advised to carefully review the final regulations to
ensure that benefits have been properly designated and are being
properly administered by service providers. Failure to meet the
applicable requirements may result in penalties for noncompliance.