Amendments to Excepted Benefits
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SUMMARY: This document contains final regulations that amend the regulations regarding excepted benefits under the Employee Retirement Income Security Act of 1974, the Internal Revenue Code (the Code), and the Public Health Service Act. Excepted benefits are generally exempt from the health reform requirements that were added to those laws by the Health Insurance Portability and Accountability Act and the Patient Protection and Affordable Care Act. In addition, eligibility for excepted benefits does not preclude an individual from eligibility for a premium tax credit under section 36B of the Code if an individual chooses to enroll in coverage under a Qualified Health Plan through an Affordable Insurance Exchange. These regulations finalize some but not all of the proposed rules with minor modifications; additional guidance on limited wraparound coverage is forthcoming.
EFFECTIVE DATE: Effective date. These final regulations are effective on
Applicability date. These final regulations apply to group health plans and group health insurance issuers for plan years beginning on or after
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SUPPLEMENTARY INFORMATION:
I. Background
The Health Insurance Portability and Accountability Act of 1996 (HIPAA), Public Law 104-191, 110 Stat. 1936, added title XXVII of the Public Health Service Act (PHS Act), part 7 of the Employee Retirement Income Security Act of 1974 (ERISA), and chapter 100 of the Internal Revenue Code (the Code), providing portability and nondiscrimination provisions with respect to health coverage. These provisions of the PHS Act, ERISA, and the Code were later augmented by other consumer protection laws, including the Mental Health Parity Act of 1996, /1/ the Mental Health Parity and Addiction Equity Act of 2008, /2/ the Newborns' and Mothers' Health Protection Act, /3/ the
FOOTNOTE 1 Public Law 104-204, 110 Stat. 2944 (
FOOTNOTE 2 Public Law 110-343, 122 Stat. 3881 (
FOOTNOTE 3 Public Law 104-204, 110 Stat. 2935 (
FOOTNOTE 4 Public Law 105-277, 112 Stat. 2681-436 (
FOOTNOTE 5 Public Law 110-233, 122 Stat. 881 (
FOOTNOTE 6 Public Law 111-3, 123 Stat. 65 (
FOOTNOTE 7 Public Law 110-381, 122 Stat. 4081 (
FOOTNOTE 8 The Patient Protection and Affordable Care Act, Public Law 111-148, was enacted on
The Affordable Care Act reorganizes, amends, and adds to the provisions of part A of title XXVII of the PHS Act relating to group health plans and health insurance issuers in the group and individual markets. The term "group health plan" includes both insured and self-insured group health plans. /9/ Section 715(a)(1) of ERISA and section 9815(a)(1) of the Code, as added by the Affordable Care Act, incorporate the provisions of part A of title XXVII of the PHS Act into ERISA and the Code to make them applicable to group health plans and health insurance issuers providing health insurance coverage in connection with group health plans. The PHS Act sections incorporated by these references are sections 2701 through 2728.
FOOTNOTE 9 The term "group health plan" is used in title XXVII of the PHS Act, part 7 of ERISA, and chapter 100 of the Code, and is distinct from the term "health plan," as used in other provisions of title I of the Affordable Care Act. The term "health plan" does not include self-insured group health plans. END FOOTNOTE
Sections 2722 and 2763 of the PHS Act, section 732 of ERISA, and section 9831 of the Code provide that the requirements of title XXVII of the PHS Act, part 7 of ERISA, and chapter 100 of the Code, respectively, generally do not apply to excepted benefits. Excepted benefits are described in section 2791 of the PHS Act, section 733 of ERISA, and section 9832 of the Code.
The parallel statutory provisions establish four categories of excepted benefits. The first category includes benefits that are generally not health coverage /10/ (such as automobile insurance, liability insurance, workers compensation, and accidental death and dismemberment coverage). The benefits in this category are excepted in all circumstances. In contrast, the benefits in the second, third, and fourth categories are types of health coverage but are excepted only if certain conditions are met.
FOOTNOTE 10 See 62 FR 16894, 16903 (
The second category of excepted benefits is limited excepted benefits, which may include limited-scope vision or dental benefits, and benefits for long-term care, nursing home care, home health care, or community-based care. Section 2791(c)(2)(C) of the PHS Act, section 733(c)(2)(C) of ERISA, and section 9832(c)(2)(C) of the Code authorize the Secretaries of
FOOTNOTE 11 26 CFR 54.9831-1(c)(3)(v); 29 CFR 2590.732(c)(3)(v); 45 CFR 146.145(b)(3)(v). END FOOTNOTE
The third category of excepted benefits, referred to as "noncoordinated excepted benefits," includes both coverage for only a specified disease or illness (such as cancer-only policies), and hospital indemnity or other fixed indemnity insurance. In the group market, these benefits are excepted only if all of the following conditions are met: (1) The benefits are provided under a separate policy, certificate, or contract of insurance; (2) there is no coordination between the provision of such benefits and any exclusion of benefits under any group health plan maintained by the same plan sponsor; and (3) the benefits are paid with respect to any event without regard to whether benefits are provided under any group health plan maintained by the same plan sponsor. /12/
FOOTNOTE 12 26 CFR 54.9831-1(c)(4); 29 CFR 2590.732(c)(4); 45 CFR 146.145(b)(4). See also Q7 in FAQs about Affordable Care Act Implementation Part XI, available at http://www.dol.gov/ebsa/faqs/faq-aca11.html. END FOOTNOTE
The fourth category of excepted benefits is supplemental excepted benefits. Such benefits must be: (1) Coverage supplemental to
FOOTNOTE 13 26 CFR 54.9831-1(c)(5); 29 CFR 2590.732(c)(5); 45 CFR 146.145(b)(5). The Departments issued additional guidance regarding supplemental health insurance coverage as excepted benefits. See EBSA Field Assistance Bulletin No. 2007-04 (available at http://www.dol.gov/ebsa/pdf/fab2007-4.pdf); CMS Insurance Standards Bulletin 08-01 (available at http://www.cms.gov/CCIIO/Resources/Files/Downloads/hipaa_08_01_508.pdf); and
--This is a summary of a
Final rules.
CFR Part: "26 CFR Part 54"
RIN Number: "RIN 0938-AS16"
Citation: "79 FR 59130"
Document Number: "RIN 1210-AB60"
Federal Register Page Number: "59130"
"Rules and Regulations"
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Amendments to Excepted Benefits
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