Condition Removed for Dental and Vision Plans as Excepted Benefits

Employers can now offer excepted benefits without charging additional premiums.  On December 20, 2013, the Departments of Treasury, Health and Human Services, and Labor jointly announced proposed regulations on excepted benefits.  Excepted benefits are benefit plans with such a limited scope as to be exempt from most of the requirements of the Affordable Care Act (e.g., age-26 mandate, enhanced claims and appeals rules, annual dollar-limit prohibition) and HIPAA (e.g., special enrollments and certificates of creditable coverage).  Currently, self-funded dental and vision plans are considered excepted benefits if employees have the right to opt out of coverage and if those electing coverage must pay a separate premium.  If employers charge a nominal premium, the administrative costs are often more than the amount collected.  Further, if the dental or vision benefits offered by an employer are not excepted benefits, but are affordable under the Affordable Care Act, individuals would be ineligible for the premium tax credit on the Exchanges even if their employer did not offer a traditional group health plan.

The proposed regulations eliminate the requirement that individuals must pay a premium in order for otherwise limited-scope dental or vision coverage to be an excepted benefit.  Until the rule is finalized, through at least 2014, an employer may offer a self-funded dental or vision plan to employees at no cost, and the limited-scope plan will not lose its excepted benefit status.  The plan must still be allowed as a separate election, however.

If you have questions about excepted benefits, call ASR Health Benefits at (616) 957-1751 or (800) 968-2449.