Can your group health client buy one of the new limited wraparound plans federal regulators want to create? Probably not.
Officials at the Internal Revenue Service (IRS), the Employee Benefits Security Administration (EBSA) and the U.S. Department of Health and Human Services (HHS) today gave the benefits community an idea of how small the early market for the supplemental health products might be in a preview of new final limited wraparound plan pilot program regulations.
The final regulations are set to appear in the Federal Register Wednesday.
The IRS, EBSA and HHS first talked about creating a new class of limited wraparound plans in December 2013, when they proposed regulations for “excepted benefits,” or benefits products beyond the reach of most Patient Protection and Affordable Care Act (PPACA) major medical coverage rules.
The agencies released draft limited wraparound regulations in December.
The agencies said a limited wraparound plan should be a supplemental health insurance product designed to offer “meaningful benefits” to people who already have major medical coverage. The pilot program coverage could last for up to three years.
Officials also proposed to set tight restrictions on which employers could offer the plans, in an effort to keep employers from using the plans as a substitute for offering ordinary major medical coverage.
For more about what’s in the new final regulations, read on.
1. Qualifying to offer the limited wrap around plans will be complicated.
In the original draft regulations, officials said just two classes of employers could offer the plans.
The first would be employers that offer coverage through one of the new PPACA Multi-State Plans (MSPs). Today, the only employers that offer MSP coverage are small and midsize employers that get health benefits through a PPACA Small Business Health Options Program (SHOP) exchange.
The second class of employers that could participate in the pilot program are those that already offer part-time workers access to group health coverage but want to provide supplemental benefits for the part-time workers who choose to buy their own individual major medical coverage.
Many benefits specialists that reacted to the proposed regulations asked the agencies to loosen the eligibility rules.
The agencies decided to let a new type of Medicaid-like health coverage, the Basic Health Program (BHP) coverage, count as individual major medical coverage.
The agencies refused to ease up on the other employer eligibility rules.
2. Officials have tried to give insurers and others a better idea of what the limited wraparound plans in the pilot program could do.
Officials have said that the wraparound plans should provide extra benefits for consumers, not simply help consumers pay deductibles.
In the preamble to the new final regulations, officials have given specific examples of the types of coverage the early wrap around plans could offer.
The suggestions include:
Coverage for the full cost of primary care.
Coverage for the cost of prescription drugs not on the primary plan’s “formulary,” or covered drug list.
Coverage for 10 physicians visits per year.
Coverage for some out-of-network health care services.
Coverage for access to specific health care facilities.
Coverage aimed at specific populations, such as people with orthopedic injuries.
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3. An insurer can be offer a pilot-program limited wraparound plan for three years without traveling back in time.
Originally, the agencies were going to let insurers offer the plans for up to three years, and make Dec. 31, 2017, the last date when an insurer could sell a plan.
Insurers pointed out that the 2015 plan year has already started, and that there is no practical way for them to offer limited wrap around plans for the 2015 plan year and use the pilot program for the full three years.
The agencies responded by pushing the last-sale date back to Dec. 31, 2018.