Today the IRS issued TD 9714, which contains final regulations that amend the regulations regarding excepted benefits under the Employee Retirement Income Security Act of 1974, the Internal Revenue Code, and the Public Health Service Act to specify requirements for limited wraparound coverage to qualify as an excepted benefit.  

In 2014 the IRS proposed regulations under which limited benefits provided through a group health plan that wrap around either (i) eligible individual health insurance, or (ii) coverage under a Multi-State Plan (collectively referred to as “limited wraparound coverage”) could constitute excepted benefits, if certain requirements were met.  The preamble to the 2014 proposed regulations acknowledged that in states that elect to establish a Basic Health Program (BHP), certain low-income individuals who would otherwise qualify for a tax credit to obtain a qualified health plan through an exchange would instead be enrolled in coverage through the BHP.  The final rules, among other things, permit limited wraparound coverage of BHP coverage in the same manner as limited wraparound coverage of eligible individual health insurance.

The final rules are effective May 18, 2015.