Pilot Program for Limited Wraparound Health Benefit Plan
Who: Part-time employees (and their dependents) and retirees who enroll in exchanges for individual coverage and were offered but were not able to afford the employer’s group coverage.
When: Final regulations were released May 18, 2015 for pilot programs to be initiated between Jan. 1, 2016, and Dec. 31, 2018. The pilot programs must end three years after they are first offered, or if later, when the collective bargaining agreement terminates after pilot coverage is first offered.
What: The Office of Personnel Management (OPM) will contract with issuers to offer at least two wraparound plans in each state so individuals would still qualify for exchange premium tax credits.
Executive Summary: The pilot program is intended as a tool for employers to pay or subsidize limited wrap-around coverage for individuals who were offered but were not able to afford the employer’s group health plan. Wraparound must meet five requirements to be an excepted benefit:
1. Meaningful Benefits - beyond coverage of cost-sharing, include a risk-sharing element, and may not provide benefits solely under a coordination-of-benefits provision or through an account-based reimbursement arrangement.
2. Maximum Cost - may not exceed the greater of (1) the maximum deduction for a health flexible spending account (FSA), as indexed for inflation ($2,550 in 2015); or (2) 15 percent of the cost of coverage under the primary plan.
3. Nondiscrimination - may not impose any preexisting condition exclusion or discriminate in eligibility, benefits or premiums.
4. Plan eligibility requirements - limited to retirees, employees (and their dependents) who are determined at the time of enrollment to be part-time employees.
5. Reporting - must provide certain information to enable OPM to determine whether the plan or issuer complies and qualifies to offer such coverage.
Examples of coverage that have been approved by HHS include:
Reimbursement for the full cost of primary care
The cost of prescription drugs not on the primary plan’s formulary
Ten physician visits per year
Services considered out-of-network by the primary plan
Access to onsite clinics or specific health facilities at no cost
Benefits targeted to a specific population (e.g. coverage for certain orthopedic injuries)
Home health coverage
Coverage of benefits not covered by essential health benefits under the primary plan
Actions: Employers should contact their agent, broker, or consultant to see if they and any of their staff qualify for a pilot program available in their state. If participation is decided upon, legal counsel should be sought in conjunction the Human Resource Department to assure compliance with eligibility and reporting. Employees potentially eligible for the wrap around should contact their employers to see if they could agree on participation and a potential employer subsidy.
The information presented and contained within this article was submitted by Ronald E. Bachman, President & CEO of Healthcare Visions and Chairman of the IHC Editorial Advisory Board. This information is general information only, and does not, and is not intended to constitute legal advice. You should consult legal advisors to determine the laws and regulations applicable to your company. Any opinions expressed within this document are solely the opinion of the individual author.