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Excepted Benefits Final Rule to Include Limited Wraparound Benefits

The Departments of Labor, Health and Human Services and Treasury recently released final rules concerning the definition of excepted benefits. As a reminder, excepted benefits must either be provided under a separate policy of insurance, or not be an integral part of the group health plan, whether insured or self-insured.      

To whom does this apply?       

This final rule is applicable to both fully insured and self-funded group health plans.  

When do these rules become applicable?       

The final rule will become applicable on May 18, 2015.   

What has changed?     

The definition of excepted benefits will now include certain limited coverage that wraps around individual health insurance. As a reminder, wraparound coverage is additional coverage that would provide a meaningful benefit to the participant. Wraparound coverage also provides expanded coverage for in-network medical clinics, or coverage for prescription drugs and primary care that would not be otherwise covered under a primary plan. Limited wraparound coverage may also provide benefits that are not Essential Health Benefits (EHBs) and that are not covered under the eligible individual health insurance. 

What are plan sponsors allowed to do?   

Plan sponsors will be permitted to offer wraparound coverage to employees who purchase an individual policy in the Marketplace or with a private insurance carrier. The final rules describe two pilot programs: one that will provide wraparound benefits for part-time workers and another for wraparound benefits for multi-state plans from the Marketplace.      

The maximum benefit of the wraparound coverage will not be able to exceed the greater of the annual health FSA contribution limit, which is $2,550 for the calendar year 2015 or 15 percent of the primary plan cost.   
What steps need to be taken to comply? 

Should plans wish to offer wraparound coverage, it should be offered no earlier than January 1, 2016, and no later than December 31, 2018. The end date is the later of three years after the coverage is offered, or the date by which the last collective bargaining agreement terminates after the offering. Plan sponsors may wish to increase the affordability of their primary health plan rather than offer limited wraparound coverage. This is due to the administrative complexity that this additional coverage may bring.  

If you have any questions, please contact your client relationship manager.  

Compliance Corner is being provided as an informational tool. It is recommended that plans consult with their own experts or counsel to review all applicable federal and state legal requirements that may apply to their group health plan. By providing this publication and any attachments, Meritain Health is not exercising discretionary authority over the plan and is not assuming a plan fiduciary role, nor is Meritain Health providing legal advice.