On October 1, 2014, the Departments of Labor, Health and Human Services and Treasury issued final regulations that address the treatment of dental, vision and employee assistance programs (EAP) as "Excepted Benefits" under the Patient Protection and Affordable Care Act's (ACA) and the Health Insurance Portability and Accountability Act (HIPAA). The final regulations are effective for plan years beginning in 2015.
Certain market reform requirements (such as minimum essential coverage) were implemented by HIPPA and ACA on the benefits provided by both insured and self-insured group health plans. Benefits that meet the definition of "Excepted Benefits" are not subject to the market reform requirements. There are four categories of Excepted Benefits:
- Benefits that are generally not health coverage such as automobile insurance and workers compensation;
- Limited excepted benefits which includes limited-scope vision or dental benefits, long-term care, nursing home care, EAP, home health care, and community-based care;
- Noncoordinated excepted benefits which include coverage for a specific disease or illness (such as cancer-only policies) and hospital indemnity or other fixed indemnity insurance; and
- Supplemental excepted benefits which include benefits that are: (a) supplemental to Medicare and the Civilian Health and Medical Program of the Department of Veterans Affairs or to Tricare, or similar coverage that is supplemental to coverage provided under a group health plan; and (b) provided under a separate policy, certificate, or contract of insurance.
The final regulations issued on October 1 clarify how to determine whether dental, vision and EAP benefits are Excepted Benefits and are not subject to the market reforms of ACA and HIPPA.
Dental and Vision Benefits
The final regulations (as did the proposed regulations) clarify that limited-scope vision or dental benefits are Excepted Benefits if (a) the participant may decline coverage when such benefits are offered in connection with major medical or primary group health insurance, whether or not a participant contribution is required or (b) the claims are administered under a separate contract from claims administration for any other benefits under the plan. Without this change, limited-scope vision and dental benefits would have been Excepted Benefits only if an additional premium was charged for such benefits (and the participant had the opportunity to decline such coverage).
Benefits provided under an EAP are Excepted Benefits if the following four criteria are met:
- The EAP cannot provide "significant benefits" in the nature of medical care. The final regulations do not define "significant benefits," but say the amount, scope, and duration of the services provided are taken into account in determining what are "significant benefits."
- The regulations contain two examples; the first example says EAP benefits are not significant benefits if the benefit provides only limited, short-term outpatient counseling for substance use disorder services (without covering inpatient, residential, partial residential or intensive outpatient care) without requiring prior authorization or review for medical necessity. The second example says EAP benefits are significant when a program provides disease management services (such as laboratory testing, counseling, and prescription drugs) for individuals with chronic conditions, such as diabetes.
- The EAP cannot be coordinated with benefits under another group health plan. Participants in a group health plan cannot be required to use and exhaust benefits under the EAP prior to being eligible for benefits under a group health plan and participant eligibility for benefits under the EAP must not be dependent on participation in a group health plan.
- The EAP cannot require employee-paid premiums or contributions.
- The EAP may not have any cost sharing requirements.