New regulations could soon reshape the lives of the producers who sell all types of non-major-medical health benefits products.
The Employee Benefits Security Administration (EBSA) — an arm of the U.S. Labor Department — has submitted a package of proposed changes to the federal “excepted benefits” regulations to the Office and Management Budget for a regulatory impact review analysis.
The original excepted benefits regulations free many products other than major medical insurance, such as dental insurance, employee assistance plans, hospital indemnity insurance, short-term medical insurance and travel medical insurance, from Health Insurance Portability and Accountability Act (HIPAA) major medical rules.
EBSA is now trying to update the regulations to show which products will be free from the usual Patient Protection and Affordable Care Act (PPACA) major medical rules.
OMB officials say they believe that the proposed regulation is not a major regulatory undertaking. They are not yet sure whether they need to conduct a regulatory flexibility analysis. They do not believe that they have to complete the regulations by a statutory deadline, and they are still determining what statutory legal authority would govern the regulations.
EBSA posted draft regulations in December.
See also: Feds may add wraparound plans
In some cases, the draft regulations could create big changes for existing products. In the proposed regulations, for example, EBSA suggested that, to qualify as excepted benefits, EAP programs might not be able to charge employees any fees or impose any cost-sharing requirements.
Larry Dunivan, an executive vice president for Ceridian, said in a comment on the draft regulations that those conditions could cause big problems for voluntary, employee-paid EAP programs.
Evelyn Ireland of the National Association of Dental Plans (NADP), asked EBSA to keep a provision in the draft that lets some benefits, such as dental insurance, continue to be excepted benefits whether or not employees have to pay separate premiums for the benefits. In some cases, she says, employers simply find it easier to offer employees low-cost benefits on an employer-paid basis.
Several commenters responded to an EBSA question about the possibility of allowing the sale of “limited wraparound coverage,” or plans meant to fill in the coverage gaps that public exchange plans leave.
David Certner of AARP suggested that the high administrative costs involved with wraparound plans might result in high commissioners for producers — and “built-in incentives to sell these products even if they are not beneficial to workers.” AARP thinks that, if EBSA allows the sale of the products, it should set limits on administrative costs and sales commissions.
Certner said EBSA should let insurers sell the products only to workers who have some kind of major medical coverage.
Lydia Mitts of Families USA — a group that often sides with AARP on health policy issues — said EBSA should consider letting employers offer the wraparound plans to part-time workers without major medical coverage. Employers do not have to offer any coverage to part-time workers, and the part-time workers might like to have the wraparound products, she said.
Representatives from America’s Health Insurance Plans (AHIP) said they think the current version of the wraparound product concept seems impractical, in part because the employer and insurer would have no practical way to verify whether workers had individual major medical coverage. Coordinating the wraparound benefits with PPACA benefits value and cost-sharing rules would also be difficult, the AHIP reps say.