ACA ‘Final Rule’ Coming into Focus
By Puneet Leekha, J.D.
In fall 2014, the U.S. Departments of Labor, the Treasury, and Health and Human Services issued a final rule that provides guidance on “excepted benefits” under the Affordable Care Act (ACA). Excepted benefits are those that do not need to comply with certain requirements under the ACA and do not qualify as minimum essential coverage. The Final Rule addresses dental and vision benefits and EAPs, but does not speak to wraparound plans. Guidance on those plans is expected.
Prior to the Final Rule, many EAPs were considered “group health plans” that were subject to various requirements under the ACA. Many of these mandates do not apply to EAPs that meet the following criteria:
* No annual or lifetime dollar limits on essential health benefits
* Compliance with out-of-pocket limitations
* Compliance with Summary of Benefits and Coverage disclosure rules
* No pre-existing condition exclusions
Criteria to be Considered Excepted Benefits
The Final Rule sets forth criteria for EAPs to be considered “excepted benefits”.1 The following criteria must be met for an EAP to be excepted from ACA requirements:
1. The EAP does not provide significant benefits in the nature of medical care. Although a specific definition is not provided, the Final Rule does state that the amount, scope and duration of covered services are considered when determining whether an EAP is considered to provide significant benefits in the nature of medical care. The Final Rule indicates that the Departments may provide additional clarification in the future and offers the following examples:
* An EAP that 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 medical necessity review does not provide significant benefits in the nature of medical care. This EAP would therefore be considered an excepted benefit and would not be subject to ACA requirements.
* An EAP that provides disease management services (such as laboratory testing, counseling and prescription drugs) for individuals with chronic conditions does provide significant benefits in the nature of medical care. This EAP would not be considered an excepted benefit and would be subject to ACA requirements.
2. Benefits under the EAP are not coordinated with benefits under another group health plan. This means that:
* Participants in the other group health plan must not be required to use and exhaust benefits under the EAP (i.e., the EAP cannot serve as a “gatekeeper”) before an individual is eligible for benefits under the other group health plan; and
* Eligibility for benefits under the EAP must not be dependent on participation in another group health plan.
3. No employee premiums or contributions may be required as a condition of participation in the EAP.
4. The EAP may not impose any cost-sharing requirements.
The second and third criteria still question whether embedded EAPs may be considered excepted benefits. The issue is whether the prohibition on employee premiums or contributions under the third criterion would prevent embedded EAPs from being excepted because any premium or contribution paid by the employee for the group health plan would likely be used to support the expense of the embedded EAP.
However, the plain language of this criterion does not support such a restrictive reading. It only prohibits the imposition of premiums or contributions as a condition of participation in the EAP. Further, proposed regulations issued on Dec. 24, 2013 (the “Proposed Rule”) contained a requirement in connection with the second criterion that EAP benefits cannot be financed by another group health plan in order to qualify as excepted benefits.
The Final Rule does away with this requirement. The intentional omission of this criterion could be viewed to reflect an understanding and recognition that EAP benefits are commonly embedded into group health plan benefits.
Although at the time of this writing no independent confirmation exists, the decision to remove this restriction appears to reflect an agreement to allow such financial support. It would be inconsistent to impose an interpretation on the third criterion that would contradict the decision to remove a barrier to utilize a single payment to fund the EAP benefits in combination with the group health plan’s benefits found under the Proposed Rule.
The Final Rule went into effect Jan. 1, 2015. It does not apply to insurers offering individual health insurance.
79 Fed. Reg. 59136-37 (October 1, 2014).
Puneet Leekha is the Senior Associate with Popovits & Robinson, P.C., and General Counsel for Chestnut Global Partners, LLC.