By Linda Rowings
Chief Compliance Officer, UBA
The 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."