January 22, 2015
- Council Comments on EBSA Proposal for Limited Wraparound Coverage as 'Excepted Benefits'
- A Bit About Your Benefits: Council Webinars
Council Comments on EBSA Proposal for Limited Wraparound Coverage as 'Excepted Benefits'
In January 22 comments to the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor (DOL), the Council commended the recent proposed rule allowing employers to supplement individual market coverage with limited “wraparound” coverage.
Wraparound insurance coverage supplements core coverage and might provide such things as extra benefits or broader networks. On December 23, 2014, DOL (along with the departments of the Treasury and Health and Human Services) published proposed amendments to current regulations regarding excepted benefits coverage under ERISA, the Internal Revenue Code and the Public Health Service Act with respect to limited wraparound coverage.
The proposed regulations set out requirements under which limited benefits provided through a group health plan that wrap either eligible individual insurance or coverage under a Multi-State plan (limited wraparound coverage) constitute “excepted benefits.” Excepted benefits are excluded from the portability provisions established under HIPAA as well as certain health plan requirements of the Patient Protection and Affordable Care Act (PPACA). Excepted benefits generally do not constitute “minimum essential coverage” under PPACA, and thus would not disqualify an individual for premium tax credits for the purchase of individual insurance through a health exchange. Under a pilot program authorized in the proposed rules, limited wraparound coverage could be offered as excepted benefits if offered no later than December 31, 2017.
The Council’s letter notes that the proposed rule “has the potential to provide employers with an important tool to help formulate benefits offerings for their employees that are cost-efficient and also comprehensive in nature. Additionally, the Proposed Rule has the potential to help employers manage their benefits to minimize the application of the [40 percent] excise tax on high-cost employer-sponsored health coverage.”
The Council’s letter also includes a number of additional comments and recommendations, including:
- The proposed rule is quite confusing and overly restrictive, and needs to be simplified to foster compliance and utilization by employers.
- Final rules should retain an employer’s ability to use insured or self-funded limited wraparound coverage.
- Because the time-limited nature of the program as described in the proposed rule may lead to less than full utilization of limited wraparound coverage by employers, the availability of limited wraparound coverage should be expanded beyond 2017. Additionally, any extension of time should be clearly set forth in any final rule so that employers and employees may make informed decisions regarding the offering of, and enrollment in, limited wraparound coverage.
- The limitation on the annual cost of coverage per employee should be modified to provide employers with a choice of limitations, such as the greater of (1) 15 percent of the cost of coverage under the employer’s primary plan, or (2) the Health Flexible Spending Arrangement (FSA) Limit, indexed using the Consumer Price Index.
- Clarification is needed as to what constitutes “meaningful” additional benefits. Such information should take account of the dollar-limited nature of the coverage and the fact that employers may lack full and complete information related to the nature and extent of the related individual insurance in which an employee is enrolled.
- The nondiscrimination rules affecting insured and self-funded plans must be modernized before they are applied to limited wraparound coverage.
- Dual enrollment in limited wraparound coverage and Health FSAs should be permitted.
The letter also provides detailed comments specific to the provisions of the Proposed Rule addressing limited wraparound coverage offered in conjunction with individual insurance for persons who are not full-time employees and the provisions addressing limited wraparound coverage offered in conjunction with Multi-State Plan coverage.
For more information, contact Kathryn Wilber, senior counsel, health policy, at (202) 289-6700.
A Bit About Your Benefits: Council Webinars
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