Supplemental Excepted Benefits? "It depends."
Last week, HHS, along with the Department of Labor and the Treasury, provided long overdue guidance regarding the third category of supplemental “excepted benefits” as defined by Section 2791 of the Public Health Services Act, Section 733 of ERISA and Section 9832 of the Internal Revenue Service Code. Coverage that meets the definition of supplemental excepted benefits is not required to comply with a variety of requirements, including certain requirements established under the Affordable Care Act.
The first two categories of supplemental excepted benefits were relatively well-defined as coverage meeting the definition of Medicare supplemental health insurance and Tricare supplemental programs, but the third category of “similar” supplemental coverage had left policy issuers scratching their heads.
The agencies last provided substantive guidance on what qualifies as supplemental excepted benefits in 2008. In their announcement last week, the agencies repeated their previous guidance and addressed whether supplemental coverage that provided additional categories of benefits, rather than just reducing coinsurance and deductibles under the insured’s primary coverage, could qualify as “excepted.” The agencies responded with the age old legal answer of “it depends.”
The guidance then explains that a policy that appears to meet the other elements that define “supplemental excepted benefits” and provides coverage of additional categories of benefits not covered by the insured’s primary group health plan can be “excepted benefits” so long the categories of additional benefits are not an essential health benefit (EHB) in the state in which the supplemental coverage is being marketed. If the policy at issue offers any coverage of EHB, the coverage is not excepted and must comply with the applicable provisions of the PHS, ERISA, and the Internal Revenue Service Code.
The agencies intend to issue regulations relating to this issue.