Friday, December 27, 2013

DOL, HHS and Treasury Department Proposed Regs: Amendments to Excepted Benefits (Dental, and Vision under PPACA)

The full release is 43 pages, here is an excerpt:
In response to [employer] concerns, and to level the playing field between insured and self- insured coverage, these proposed regulations would eliminate the requirement under the HIPAA regulations that participants pay an additional premium or contribution for limited-scope vision or dental benefits to qualify as benefits that are not an integral part of a plan (and therefore as excepted benefits). The Departments invite comments on this approach.... the Departments have developed these proposed regulations to treat certain wraparound coverage provided under a group health pl an as excepted benefits when it is offered to individuals who could receive such benefits through their group health plan if they could afford the premiums, but who do not enroll in the employer-sponsored plan because the premium is unaffordable under the law. As excepted benefits, the coverage would generally be exempt from the HIPAA and Affordable Care Act market reform requirements of ERISA, the PHS Act, and the Code. Wraparound coverage would only qualify as excepted benefits under limited circumstances ... these proposed regulations set forth criteria for an EAP to qualify as excepted benefits beginning in 2015. Under these proposed regulations, benefits provided under EAPs are excepted if four criteria are met.
Under HIPAA Regulations currently in effect, insured limited scope vision and dental plans are considered Excepted Benefits. However self-funded dental and vision plans must meet two additional requirements to be considered Excepted Benefits: 
  • Employee must elect the coverage separately from any medical plan; and, 
  • Employees must contribute toward the cost of coverage (i.e employee contribution requirements).
If these additional conditions are not met, then the plans would be subject to the Affordable Care Act (ACA). 
ACA Risks. For calendar year group health plans, the self-funded plan must include minimum essential benefits and meet other standards specified in IRC Section 9815 or be subject to a $100/day per participant penalty. Fiscal year health plans become subject to these rules on the first day of the 2014 plan year. 
The Requirements of IRC Section 9815. The rule will require ACA-compliant health plans to include, inter alia:
  • No lifetime or annual limits
  • Elimination of preexisting condition limitations (e.g. dental 5 year replacement rules; extraction in conjunction with remediation)
  • Coverage for preventive care services
  • Mandatory coverage for dependents
  • More elaborate claims appeals processes
  • Other patient protections
  • Coverage for clinical trials
  • No excessive waiting periods
  • Additional notice requirements
The Proposed Ruling
  • Effective Date. The proposed relief for self-funded dental and vision plans (as well as Employee Assistance Plans (EAPs)) will become effective as of January 1, 2015. However, the Agencies will consider limited scope dental and visions plans, as well as EAPs, as meeting the conditions of these proposed regulations through 2014 or later, pending the release of final regulations. In the event the final regulations are more restrictive than these proposed regulations, the final regulations will not become effective prior to January 1, 2015. In other words, these proposed regulations are in effect for 2014!
  • The Importance of These Regulations. Generally, employers now may adopt self-funded dental and vision plans without requiring employee contributions. It is our understanding, however, that employees still must be given the option to elect the coverage on a freestanding basis, separately from the election to participate in medical coverage. If the self-funded dental and medical coverage is offered on a combined basis, the dental or vision plan will become subject to ACA, including the preexisting condition limitations and elimination of annual or lifetime maximums. It’s worth noting that certain dental procedures are subject to preexisting condition limitations such as the five-year replacement rule and the one-tooth extraction requirements. ...