So-called excepted benefits—limited-scope dental and vision benefits—are exempt from the Affordable Care Act’s (ACA) requirements to provide affordable group coverage that provides minimum value.
Final ACA regulations modify those benefits, and add long-term care benefits and certain employee assistance plans (EAPs) into the excepted benefits category.
The intent is to allow employees who buy individual health insurance policies through an exchange, and who qualify for premium tax credits, to receive employer-provided excepted benefits without jeopardizing their eligibility for those credits.
The regs become effective with the 2015 plan year; until then you may rely on the proposed regs. (79 F.R. 59130, 10-1-14)
Dental, vision and long-term care benefits. Under the tax code, excepted limited-scope dental and vision benefits, and long-term care benefits, must be provided under a separate policy, certificate, or contract of insurance or must not be an integral part of a group plan.
The final regs adopt the proposed regs’ elimination of the requirement that employees be charged an additional premium or contribution for these benefits. The regs also clarify that benefits aren’t integral to the group plan, regardless of whether they’re provided through the same plan, a separate plan or as the only plan offered to employees, if one of these conditions is satisfied:
- Employees may decline coverage (e.g., employees can opt out, regardless of whether they contribute to the coverage)
- Claims for benefits are administered under a contract that’s separate from claims administration for other benefits under the plan.
Employee assistance plans. Under the final regs, EAPs that don’t provide significant benefits in the nature of medical care are excepted benefits. Significance is determined based on the amount, scope and duration of the benefits provided.
WHAT’S SIGNIFICANT: For example, an EAP is OK if it provides only limited, short-term outpatient counseling for substance abuse, without covering inpatient, residential or intensive outpatient care and without requiring prior authorization or review for medical necessity.
What’s out: An EAP that provides diseaseservices, such as lab testing, counseling and prescription drugs for chronic conditions.
In addition to offering nonsignificant benefits, excepted EAPs must meet these requirements:
- Benefits aren’t coordinated with benefits under another group plan (i.e., EAPs aren’t gatekeepers, preventing employees from accessing other group benefits until EAP benefits are exhausted).
- Employees’ eligibility for EAP benefits doesn’t depend on their participation in another plan.
- Employees aren’t charged premiums, contributions or cost sharing.