| Final Rules for Excepted Benefits |
| The Internal Revenue Service (IRS), Department of Labor (DOL), and the Department of Health and Human Services (HHS), collectively known as the "Agencies," have finalized the proposed regulations for dental and vision benefits as well as Employee Assistance Plans (EAPs) that outline the definitive excepted benefit rules for these types of coverages. Final regulations to address limited wraparound coverage, sketched out in the proposed regulations, will be issued in the future. |
| Background |
| Health flexible spending accounts (FSAs) must be excepted benefits to be offered to employees, and health reimbursement arrangements (HRAs) must be integrated, a retiree-only plan, a limited-purpose HRA that provides only dental and vision expense reimbursement, or a spend-down account in order to continue to be offered by employers. Maintaining excepted benefit status for certain benefits relieves employers and plan sponsors from added requirements under the Health Insurance Portability and Accountability Act (HIPAA) and health care reform. |
| Health FSA, HRAs, and Long-term Care Benefits |
| Limited-scope vision and dental benefits do not have to be offered in connection with a separate offer of major or "primary" group health coverage under the plan to meet the statutory criteria that such benefits are "otherwise not an integral part of the plan." To meet this criterion, limited-scope vision and dental benefits may be offered without connections to a primary group health plan or may be the only plan offered by the employer. |
| Effective for plan years starting on or after January 1, 2015, limited-scope vision and dental benefits will be treated as excepted benefits if provided under a separate policy, certificate or contract of insurance, or are otherwise not an integral part of a group health plan, which means: |
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Participants may decline coverage, or |
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Claims for the benefits are administered under a contract separate from claims administration for any other benefits under the plan. |
| Long-term care benefits are also subject to the "not an integral part of a group health plan" standard in order to be classified as excepted benefits. |
| Employee Assistance Programs |
| Employee Assistance Programs (EAPs) are programs offered by employers that typically provide very limited benefits to address circumstances that might otherwise adversely affect employees’ work and health. Unfortunately, some EAPs that provide a few benefits beyond the scope of very limited benefits might be enough to disqualify employees from obtaining premium assistance at the Marketplace. |
| The DOL final guidance provides that, starting in 2015, EAPs will be excepted benefits if the program: |
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Does not provide significant benefits in the nature of medical care. For this purpose, the amount, scope, and duration of covered services are taken into account; |
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Is not coordinated with benefits under another group health plan; |
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1. |
Participants in the other group health plan must not be required to use and exhaust benefits under the EAP before eligibility for benefits under the other group health plan; and |
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2. |
Participant eligibility under the EAP must not be dependent on participation in another group health plan; |
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Does not require any employee premiums or contributions to participate; and |
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Does not impose any employee cost sharing. |
| What does "significant benefits" mean? Guidelines were not included in the final regulations, although the proposed regulations suggested the following: |
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No inpatient care benefits |
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No more than 10 outpatient visits for mental health or substance use disorder counseling |
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An annual wellness checkup |
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Immunizations |
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Diabetes counseling |
| Through future guidance, the Agencies may provide additional clarification regarding when a program provides significant benefits in the nature of medical care. |
| More Information |
| For the complete final rules, please see the Federal Register issued October 1, 2014. If you have additional questions, you may contact your CONEXIS representative for further information. |
