Employer coverage would not wrap around MSP SHOP coverage but rather around individual MSP coverage. Under prior guidance the employer would still not be able to pay for the primary individual MSP coverage, but would only pay for the wraparound benefits.
The employer could offer some categories of employees comprehensive coverage and other categories of employees only wrap coverage, as long as coverage offers did not discriminate on the basis of preexisting conditions or health status or in favor of highly compensated employees. Alternatively, the employer might offer all emloyees the option of either comprehensive coverage or wrap coverage, in which case employees who opted for wrap coverage would not qualify for premium tax credits unless employer coverage was in fact inadequate or unaffordable.
Employers would in any event be required to continue to make a total aggregate contribution toward primary and wrap coverage for all employees that was “substantially the same” as the amount contributed for coverage of all full-time employees for plan years that began in 2013 and 2014. The employer could be liable for the employer mandate penalty if the employer failed to offer adequate and affordable coverage to some employees that resulted in those employees receiving premium tax credits through the marketplace.
With open enrollment closed for 2015 and the Departments having finalized the Benefit and Payment Parameters Rule and Letter to Issuers for 2016, we have entered the Spring Affordable Care Act regulatory doldrums. Reports, minor regulations, guidances, and court decisions continue to appear, however. Two appeared on March 16. This post addresses the final wraparound coverage excepted benefits rule, and a report on health insurance coverage and the ACA (technical appendix here), both released on March 16, 2015.
The wraparound coverage rule creates a new category of excepted benefits. The concept of excepted benefits was created by the Health Insurance Portability and Accountability Act of 1996 and is carried forward in the ACA. Excepted benefits plans provide benefits that resemble in some way the health benefits that have been regulated by HIPAA and are now regulated by the ACA, but are more limited or are more tangential to medical care. These include benefits that are not generally medical benefits but do afford some medical coverage (auto liability, workers’ compensation); health coverage that is not medical coverage (dental, vision, long-term care); benefits that are not coordinated with medical benefits (specific disease coverage, fixed dollar indemnity coverage); and coverage that is supplemental to medical coverage (such as Medicare supplement policies). Additional specific conditions must be met for some of these benefits to qualify as excepted benefits.
Excepted benefits are generally not subject to Affordable Care Act requirements, such as the ban on dollar coverage limits or preexisting conditions clauses. But excepted benefit coverage explicitly does not qualify as minimum essential coverage. An individual who has only excepted benefit coverage and does not qualify for a shared responsibility requirement exception must still pay the individual mandate penalty. Large employers that offer only excepted benefits may have to pay the employer responsibility penalty, but individuals offered only excepted benefits by their employers are not disqualified from receiving premium tax credits to purchase individual coverage through the marketplaces.
The list of excepted benefits has been fairly stable since the HIPAA rules were published in 2004. The agencies are authorized to recognize new types of excepted benefits or change existing excepted benefits, however, and the ACA has prompted them to do so. In December of 2013, the agencies published a proposed rule to change the requirements for vision benefits linked with self-insured plans and to recognize employee assistance programs and “wraparound” benefits as excepted benefits under certain circumstances. Rules on vision coverage and employee assistance programs were finalized by the agencies in October, 2014, but the wraparound coverage rule proved much more controversial and the agencies decided to hold the proposal for further consideration.
On December 23, 2014 the agencies published a second proposed rule (discussed here) proposing a pilot program of a more limited wraparound coverage benefit. The basic idea of wraparound coverage is reasonably straightforward. Some employers offer generous benefit packages to their employees. However, they often do not offer these benefits to part-time employees or retirees, who may be eligible for less generous benefits through the marketplaces. Moreover, employer coverage may be more generous than marketplace coverage.
Under the new rule, employers may offer part-time and retired employees wraparound coverage that wraps around and increases the benefits covered through primary “qualifying individual coverage.” This includes any individual coverage that is not grandfathered or transitional coverage or another form of excepted benefits. Specifically, the final rule clarifies that qualifying individual coverage includes coverage under the Basic Health Plan Program. Employers may also supplement marketplace coverage that they offer through the Multi-State Plan (MSP) program to their full-time employees.
Read the full article here.
Contact Steven G. Cosby, MHSA with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.
