By Lin­da Rowings
Chief Com­pli­ance Offi­cer, UBA

excepted benefitsThe U.S. Depart­ment of Health and Human Ser­vices (HHS), the Inter­nal Rev­enue Ser­vice (IRS), and the Depart­ment of Labor (DOL) released final reg­u­la­tions that explain when den­tal and vision plans and employ­ee assis­tance plans (EAPs) will be con­sid­ered “except­ed ben­e­fits.” Except­ed ben­e­fits are health ben­e­fits that are lim­it­ed enough in scope to be exempt from many of the require­ments of the Patient Pro­tec­tion and Afford­able Care Act (PPACA), such as annu­al dol­lar lim­its, report­ing on W‑2s and var­i­ous fees.

Except­ed ben­e­fits are not con­sid­ered “min­i­mum essen­tial” cov­er­age. This means that a large employ­er will not avoid the employ­er-shared respon­si­bil­i­ty (play or pay) penal­ty if it sim­ply offers cov­er­age that is con­sid­ered an except­ed ben­e­fit. It also means that an indi­vid­ual who is cov­ered by an except­ed ben­e­fit remains eli­gi­ble for a pre­mi­um tax cred­it, as long as the per­son meets the income and oth­er require­ments to receive the credit.

The reg­u­la­to­ry agen­cies issued pro­posed reg­u­la­tions in Decem­ber 2013 and the final reg­u­la­tions gen­er­al­ly fol­low the pro­posed reg­u­la­tions, although in a few instances the final rule is less restric­tive than the pro­posed rule. The pro­posed reg­u­la­tions also addressed a new type of ben­e­fit called a “lim­it­ed wrap­around” plan; the agen­cies will issue a final reg­u­la­tion on this ben­e­fit later.

Den­tal and vision ben­e­fit plans are con­sid­ered except­ed ben­e­fits if the ben­e­fits offered are lim­it­ed to care of the mouth or eyes and the ben­e­fits either are pro­vid­ed under a sep­a­rate pol­i­cy or they are not an “inte­gral” part of the med­ical plan. Under the final rules, ben­e­fits are not con­sid­ered an inte­gral part of a plan if par­tic­i­pants have the right to opt out of cov­er­age, or if claims are admin­is­tered under a sep­a­rate con­tract from oth­er ben­e­fits admin­is­tra­tion. To qual­i­fy as a non-inte­grat­ed ben­e­fit, employ­ees do not have to pay a sep­a­rate pre­mi­um or con­tri­bu­tion for the except­ed coverage.

Par­tic­u­lar­ly for self-fund­ed plans, the new rules will make it much sim­pler for a stand-alone den­tal or vision plan to qual­i­fy as an except­ed ben­e­fit. A ben­e­fit will be con­sid­ered an “except­ed ben­e­fit” if it meets any of these criteria:

  • It is pro­vid­ed through a sep­a­rate pol­i­cy or contract.
  • The employ­ee may decline cov­er­age for the stand-alone den­tal or vision coverage.
  • Claims for the den­tal or vision ben­e­fits are admin­is­tered under a con­tract sep­a­rate from claims 
admin­is­tra­tion for any oth­er ben­e­fits admin­is­tra­tion under the plan.

For more infor­ma­tion on except­ed ben­e­fits, includ­ing how to deter­mine the sta­tus of EAPs, down­load UBA’s PPACA Advi­sor, “Except­ed Ben­e­fits – ‘Lim­it­ed Scope’ Den­tal and Vision Plans and EAPs.”

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