The Obama administration's final rule on wraparound benefit coverage makes it clear that insurers can't offer excepted benefits as a substitute for primary coverage.
"[T]hese final excepted benefits regulations are designed to allow plan sponsors an option to offer additional workers health coverage comparable to that which they already offer, rather than to serve as a substitute for primary coverage," stated the rule, which was written by the Departments of Health and Human Services, Labor and Treasury.
The final rule remains largely the same as the proposed rule for limited wraparound coverage released in late December. However, changes include the following:
- The sunset date for pilot programs offering limited wraparound coverage has been extended. The start date of such pilots is now no earlier than Jan. 1, 2016 and no later than Dec. 31, 2018, according to the rule. The end date remains unchanged from the proposed rule: Three years after the start date or the termination date of the last collective bargaining agreement relating to the plan.
- The limited amount for wraparound coverage has increased from $2,500 to either "the maximum permitted annual salary reduction towards a health flexible spending account … or [15 percent] of the cost of coverage under the primary plan." The larger limit should help reduce gaps in coverage, the rule said; if the limit were higher, though, then it would not constitute a limited benefit.
The final rule maintains the following provisions from the proposed rule.
- Wraparound coverage of Basic Health Program coverage is allowed "in the same manner as limited wraparound coverage of eligible individual health insurance."
- Wraparound coverage cannot exclude anyone based on pre-existing conditions, health factors or income.
- Self-insured plans or payers who offer (or plan to offer) multi-state plans will report to the federal Office of Personnel Management. OPM will review and approve plans but will not design them. Group health plans, meanwhile, will report to HHS.
Insurers have raised concerns about including wraparound coverage in the definition of excepted benefits, FierceHealthPayer previously reported. Excepted benefits are typically limited to vision care and long-term care insurance; expanding that definition could disrupt the market, payers say.
The final rule will appear in the Federal Register on March 18 and go into effect 60 days later.
- read the final rule (.pdf)
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