By Danielle Capilla
Chief Com­pli­ance Offi­cer at Unit­ed Ben­e­fit Advisors

ChangesAheadHealth plan spon­sors would be per­mit­ted to offer wrap­around cov­er­age to employ­ees pur­chas­ing indi­vid­ual health insur­ance in the pri­vate mar­ket, includ­ing the Mar­ket­place, in lim­it­ed cir­cum­stances, under a new Final Rule issued by the Depart­ment of Labor (DOL) and oth­er fed­er­al agen­cies. The Final Rule, pub­lished March 18, 2015, sets forth two nar­row pilot pro­grams for the lim­it­ed wrap­around cov­er­age. One pilot pro­gram allows wrap­around ben­e­fits only for mul­ti-state plans (MSPs) in the Health Insur­ance Mar­ket­place. The sec­ond pilot pro­gram allows wrap­around ben­e­fits for part-time work­ers who enroll in an indi­vid­ual pol­i­cy or in Basic Health Plan (BHP) cov­er­age for low-income indi­vid­u­als, which was estab­lished under the Patient Pro­tec­tion and Afford­able Care Act (PPACA). The wrap­around cov­er­age would be an except­ed ben­e­fit. Except­ed ben­e­fits are gen­er­al­ly exempt from cer­tain require­ments of fed­er­al laws, includ­ing ERISA, the IRS Code, and parts of PPACA.

Gen­er­al require­ments. To be allow­able by either pilot pro­gram, the wrap­around cov­er­age must be specif­i­cal­ly designed to pro­vide mean­ing­ful ben­e­fits such as: (1) cov­er­age for expand­ed in-net­work med­ical clin­ics or providers; (2) reim­burse­ment for the full cost of pri­ma­ry care; or (3) cov­er­age of the cost of pre­scrip­tion drugs not on the for­mu­la­ry of the pri­ma­ry plan. The lim­it­ed wrap­around cov­er­age must not pro­vide ben­e­fits only under a coor­di­na­tion-of-ben­e­fits pro­vi­sion and must not con­sist of account-based reim­burse­ment arrangements.

The annu­al cost of cov­er­age per employ­ee (and any cov­ered depen­dent, defined as any indi­vid­ual who is or may become eli­gi­ble for cov­er­age under terms of a group health plan because of a rela­tion­ship to a par­tic­i­pant) must not exceed the greater of: (1) the max­i­mum per­mit­ted annu­al salary reduc­tion con­tri­bu­tion toward health flex­i­ble spend­ing arrange­ments (FSAs) ($2,550 for 2015); or (2) 15 per­cent of the cost of cov­er­age under the pri­ma­ry plan, includ­ing both employ­er and employ­ee con­tri­bu­tions toward cov­er­age. The wrap­around cov­er­age is also sub­ject to non-dis­crim­i­na­tion rules that pro­hib­it pre­ex­ist­ing con­di­tion exclu­sions, favor­ing of high­ly com­pen­sat­ed indi­vid­u­als, and dis­crim­i­na­tion based on health status.
For more infor­ma­tion on MSP cov­er­age stan­dards, part-time employ­ee stan­dards, report­ing and qual­i­fy­ing dates for the pilot pro­grams, down­load UBA’s free PPACA Advi­sor, “Wrap­around Except­ed Ben­e­fits to Launch with Two Pilot Pro­grams”.

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