The IRS, the Department of Labor and the Department of Health and Human Services recently issued final regulations ( T.D. 9714) that amend existing regulations regarding excepted benefits. Excepted benefits are generally exempt from requirements that apply under the Health Insurance Portability and Accountability Act (HIPPA) and the Affordable Care Act (ACA).
The final regulations allow group health plan sponsors, in limited circumstances, to offer wraparound coverage to employees who are purchasing individual health insurance in the private market, including through the health insurance marketplace. The final regulations establish five requirements that the wraparound coverage must meet to qualify as an excepted benefit:
1. The wraparound coverage must provide meaningful benefits beyond cost sharing under the employee's individual health coverage.
2. The annual cost of coverage under the wraparound plan may not exceed certain limits.
3. The wraparound coverage must meet nondiscrimination requirements.
4. The wraparound coverage plan must comply with certain eligibility and benefits standards.
5. The plan must report certain information to the government.
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