• HIPAA Excepted Benefits

  In 1996 Congress enacted the Health Insurance Portability and Accountability Act (HIPAA), which imposed a number of requirements on group health plans.  Over the years Congress has amended HIPAA to add additional group health plan mandates (such as minimum maternity stays, mental health parity, and reconstructive surgery after a mastectomy, among others). Congress recognized that many types of employer-sponsored welfare programs do not provide benefits in the nature of medical care.  As such, they were excepted from the HIPAA requirements. Similarly, these "HIPAA excepted benefits" are exempt from many of the provisions of the Health Care Reform law, including all of the plan design mandates, which were added to HIPAA.

  As a general rule, all of the following are HIPAA excepted benefits (assuming they satisfy certain conditions, such as being offered on a stand-alone basis) and, therefore, are exempt from the Health Care Reform plan design mandates (for more information, contact your legal counsel):

  • Accident, including accidental death and dismemberment
  • Disability
  • Limited scope dental
  • Limited scope vision
  • Long-term care
  • Health Flexible Spending Accounts
  • Coverage only for a specified disease or illness (such as cancer-only policies)
  • Hospital indemnity or other fixed indemnity insurance
  • Gap coverage

• Health Savings Accounts

  Health Savings Accounts are not subject to the requirements of HIPAA because they are not considered group health plans. The high deductible health plan offered in conjunction with an HSA is subject to the requirements of HIPAA (and, therefore, the Health Care Reform plan design mandates).

• Stand-Alone Retiree Health Plans

  The preamble to the interim final regulations on grandfathered plans reiterated that group health plans with “less than two participants who are current employees” are  exempt from the plan design mandates of Health Care Reform.  Accordingly, under the terms of these statutory provisions, group health plans that do not cover at least two employees who are current employees (such as plans in which only retirees participate) are exempt from the Health Care Reform’s plan design mandates.  The federal agencies with jurisdiction over Health Care Reform have indicated that they expect to review and publish additional guidance on this issue.

Plan Design Mandate Exemption Hot Topics and FAQs

• Do plans that are exempt from ERISA have to comply with the Health Care Reform requirements?

  Answer: Generally yes. The Health Care Reform plan design mandates apply more broadly than ERISA.  For example, the plan design mandates amended the parallel HIPAA provisions in ERISA, the Internal Revenue Code, and the Public Health Service Act.  Therefore, an exemption from ERISA alone does not generally mean that a plan is exempt from the Health Care Reform requirements.  It is important to consult with your legal counsel on this question.  American Fidelity does not provide tax or legal advice.