The Federal agencies recently finalized regulations on "excepted benefits," which are exempt ("excepted") from almost all provisions of health reform.
The guidance addresses limited-scope vision and dental benefits and employee assistance programs (EAPs). The final regulations adopt a number of employer-friendly clarifications. Review our original Client Bulletin.
Dental and vision benefits will qualify as excepted if limited in scope and the benefits either are:
1) Provided under a separate policy, certificate, or contract of insurance; or
2) If self-funded, the vision and dental benefits are not an "integral part" of a group health plan because health plan participants can elect not to receive coverage for these benefits.
(The final regulations eliminate the requirement that would have required participants to pay an additional premium or contribution for limited-scope vision or dental benefits.) So, a self-funded plan can include limited scope dental and vision benefits if employees electing the medical plan have the choice to not receive those benefits. That can be noted in enrollment materials and ideally would appear in the self-funded health plan document as well. If premiums are the same regardless of a waiver, which the law now allows, it is unlikely individuals will opt out. Most employers will downplay that choice.
In addition, limited-scope vision or dental benefits do not have to be offered in connection with a major medical or "core" group health coverage (and may be the only plan offered). Employees may decline the coverage (for example, by "opt-out"). Finally, claims for the dental or vision benefits may be administered under a contract separate from claims administration for any other benefits under the plan.
Four rules apply for determining whether an EAP is an "excepted benefit:"
- The EAP cannot provide "significant benefits in the nature of medical care." The final regulations do not adopt a ten visit limit. Instead, "the amount, scope, and duration of covered services are taken into account." For example, an EAP that provides only limited, short-term outpatient counseling for substance abuse (but no inpatient, residential, partial residential, or intensive outpatient care) without prior authorization or review for medical necessity, does not provide significant benefits in the nature of medical care. On the other hand, an EAP that provides disease management services (such as lab testing, counseling, and prescription drug) for individuals with chronic conditions, such as diabetes, does provide significant benefits in the nature of medical care. That EAP would not be exempt/excepted from reform.
- EAP benefits cannot be coordinated with benefits under another group health plan. Core group health plan participants must not be required to use and exhaust benefits under the EAP as a gatekeeper before being eligible for certain benefits under the group health plan. Similarly, EAP benefits must not be conditioned on participation in a separate group health plan.
- The EAP must be provided at no charge to employees.
- No employee cost sharing (copays, deductibles, etc.) can be required by the EAP.
The rules do not provide that wellness programs are excepted benefits, and an employer cannot include them in an EAP with that goal in mind.
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