minimum essential 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

On April 23, 2013, the Departments of Labor, Health and Human Services and the Treasury (the “Departments”) issued an updated template and sample completed template for summaries of benefits and coverage (“SBCs”) that must be provided for coverage beginning in 2014.  The Departments also released Frequently Asked Questions that include the following guidance:

  • The only change to the existing SBC template is the addition of statements regarding whether a group health plan offers minimum essential coverage that meets the requirements for providing minimum value.  (See ACA’s Cost-Sharing Limitations on Employer Health Coverage for an explanation of the minimum essential coverage and minimum value requirements.)  If an employer or issuer is unable to modify the SBC template to include this additional information and continues to use the template provided for 2013, the new information for 2014 may be disclosed in a separate document that is provided with the SBC.  No other changes have been made to the SBC template, including to the examples that must be included, to the instructions for providing SBCs, or to the uniform glossary.
  • The Departments have extended for another year enforcement relief that they issued last year.  Pursuant to this relief, the Departments will not impose penalties on plans and issuers that are working diligently and in good faith to provide the required SBC content in a format that is consistent with the final regulations.  In addition, the Departments have also extended the safe harbor for providing SBCs electronically to participants and beneficiaries in connection with their online enrollment or online renewal of coverage under the plan.
  • Because annual limits on essential health benefits will no longer be permissible starting in 2014, a plan may, at its option, delete the following row that appears on the first page of the SBC template:  “Is there an overall limit on what the plan pays?”.  Otherwise, the plan should answer “no” to this question.
  • If an educational institution, such as an institution of higher education, maintains insured health coverage for its students, the institution will have met its requirements for providing SBCs if another party, such as the health insurance issuer, timely provides completed SBCs to the students.
    Continue Reading Departments Publish Updated SBC Template, Making Few Changes for 2014

The Affordable Care Act has numerous provisions that restrict the amounts that employer-sponsored health plans may require employees to pay for health care.  These provisions include prohibitions on annual and lifetime dollar limits on essential health benefits, restrictions on out-of-pocket maximums, and requirements to provide preventive care services and items at no cost to participants.  The rules apply to insured and self-insured plans and some, but not all, apply to grandfathered plans as well as non-grandfathered plans.  This article summarizes ACA’s cost-sharing requirements for employer-sponsored group health plans and guidance that the Departments of Labor, Health and Human Services, and Treasury (the “Departments”) have recently released implementing these requirements. 
Continue Reading ACA’s Cost-Sharing Limitations on Employer Health Coverage