Just before Valentines day, the Department of Labor (DOL), Health and Human Services (HHS), and the Treasury announced additional guidance in the form of Q&As for the Affordable Care Act (ACA) compliance. This guidance focusses on the definition of "excepted benefits" which is relevant for compliance with many requirements under the Public Health Services Act (PHSA), Health Insurance Portability and Accountability Act (HIPAA), Employee Retirement Security Act (ERISA), Tax rules (Code) and the ACA.
The two Q&As focus on one of the excepted benefits for "supplemental health insurance." This exception applied only where benefits are provided under a separate policy, certificate, or contract of insurance and are either: Medicare supplemental health insurance (also known as Medigap), Tricare supplemental programs, or “similar” supplemental coverage provided to coverage under a group health plan.
Prior guidance clarified what may be similar and therefore qualify as an excepted benefit under this specific exclusion:
1. The policy, certificate, or contract of insurance must be issued by an entity that does not provide the primary coverage under the plan;
2. The supplemental policy, certificate, or contract of insurance must be specifically designed to fill gaps in primary coverage, such as coinsurance or deductibles;
3. The cost of the supplemental coverage may not exceed 15 percent of the cost of primary coverage; and
4. Supplemental coverage sold in the group insurance market must not differentiate among individuals in eligibility, benefits, or premiums based upon any health factor of the individual (or any dependents of the individual).
The agencies also will propose regulations further defining #2 above to allow coverage as filling in the gaps only if the benefits covered by the supplemental insurance product are not an essential health benefit (EHB) in the State where it is being marketed. This provision alone would rule out preventive care only plans as preventive care must be an EHB in all states. This would be true of ALL benefits under the program. If any benefit in the coverage is an EHB in the State where it is marketed, the insurance coverage would not be an excepted benefit under the intended proposed regulations, and would have to comply with the applicable provisions of the PHSA, HIPAA, ERISA, Code and the ACA.
If you have questions on the ACA or other compliance issues above, please contact Kinney & Larson.