Feds issue proposal for limited wraparound coverage

The U.S. Departments of Labor, Health and Human Services, and Treasury released proposed rules Friday that would amend the definition of expected benefits to include wraparound coverage.

The regulations would allow an employer to use a wraparound plan to ensure that employees who purchased plans on the public insurance exchange could receive benefits comparable to those offered by the employer's plan.

The proposed rules include five requirements. Here's a summary of three that matter most to insurers:

Covers additional benefits

The proposal notes that the limited wraparound coverage would have to provide meaningful benefits that go beyond the coverage of cost sharing. For instance, wraparound coverage could provide coverage for expanded in-network medical clinics or providers. The wraparound coverage would not be only an account-based reimbursement arrangement. However, as noted in the proposal, "Limited wraparound coverage that covers solely cost sharing is not permissible because reduced cost sharing can be obtained by choosing an individual health insurance policy with a higher actuarial value."

Limited in amount

The departments note that the limited wraparound coverage should be just that--limited. For an employee covered under limited wraparound, the coverage cannot exceed the maximum annual contribution for health flexible spending accounts, which is $2,500 for 2014. The cost of coverage would include employer and employee contributions, and would be determined the same way premiums are calculated.

Multi-state plan coverage

Under the section titled 'Plan eligibility requirements' in the proposed rules, the departments mention requirements for multi-state plan coverage. The limited wraparound coverage must be designed and approved by the Office of Personnel Management. This would ensure the plans' benefits fall under Affordable Care Act requirements. What's more, employers' contributions for wraparound coverage must be nearly the same as contributions they offered full-time employees in 2014.

The proposed rule will be published in the Federal Register tomorrow and is open to public comment until Jan. 22, 2015.

For more:
- here's the proposed rule (.pdf)