New proposed regulations modify the rules that would allow employers to offer limited wraparound health coverage as an “excepted benefit” to employees who purchase individual health coverage through an Exchange.  Although the new rules relax some of the controversial requirements proposed in 2013, they also create new restrictions and reporting requirements.

The new proposed regulations include a sunset date that generally allows the coverage to remain in effect for only three years (or for the duration of a collective bargaining agreement, if longer).  The preamble of the new proposal explains that the rules will operate as a pilot program that will allow the agencies to evaluate their effect on employer-provided health coverage.  Employers have until January 22, 2015, to comment on the proposed regulations. 
Continue Reading Agencies Propose Pilot Program for Wraparound Health Coverage

If an employee assistance program (“EAP”) provides counseling for substance abuse, stress, depression, and similar health problems, the Labor Department and IRS regard it as a group health plan.  Unless the EAP qualifies for an exception, it will have difficulty complying with the group health plan coverage requirements and other mandates.

Recent guidance from the federal regulatory agencies gives many EAPs a “free pass” for 2014, and creates new compliance options for 2015 and beyond.  In order to keep their EAPs in compliance after 2014, employers might need to make design changes or satisfy other new requirements.  EAP sponsors should take this opportunity to review their compliance options and develop a compliance strategy.
Continue Reading Compliance Strategies for Employee Assistance Programs

Starting in 2014, most individuals must maintain minimum essential health coverage or pay a penalty.  (Please see our post here for a description of the health coverage mandates that apply to individuals and their families.)  The Internal Revenue Service recently issued a proposed regulation clarifying the minimum essential coverage rules and other aspects of the individual mandate.  Several points addressed in the proposed regulation will be of interest to employers that offer group health coverage to their employees.

Excepted Benefits Are Not Minimum Essential Coverage

Employers might wish to structure programs providing limited health benefits—such as dental and vision coverage or employee assistance—as “excepted benefits” so that these programs will avoid the group health plan requirements.  Final regulations issued last year explained that minimum essential coverage does not include “health insurance coverage” consisting only of excepted benefits.  The proposed regulation clarifies that no coverage (whether insured or self-insured) consisting solely of excepted benefits will qualify as minimum essential coverage.

This clarification confirms that coverage consisting solely of excepted benefits will not satisfy the employer’s obligation to offer minimum essential coverage to at least 95% of its full-time employees or the individual’s obligation to maintain minimum essential coverage.  Employers must offer, and individuals must maintain, other group health coverage in order to satisfy these shared-responsibility mandates.

On the positive side, however, a lower-income employee who is covered by a plan that offers only excepted benefits will not be prevented from receiving premium tax credits.  The tax credits help lower-income individuals purchase individual health coverage on an exchange.  An employee who has minimum essential coverage from an employer health plan is not eligible for premium tax credits; but employer coverage consisting solely of excepted benefits will not affect the employee’s eligibility.
Continue Reading New Guidance Clarifies Minimum Essential Coverage Rules