The departments of Labor, Treasury and Health and Human Services today published final rules amending the definition of excepted benefits to include certain limited coverage that wraps around individual health insurance.

The final rule will put in place two pilot programs for providing limited wraparound coverage, one allowing for wraparound benefits under the health insurance marketplace’s Multi-State Plan program and the other permitting wraparound coverage for part-time workers enrolled in an individual policy or in basic health plan coverage for “low-income individuals.”

Unlike in previous drafts, the pilot programs dates have been slightly altered, with pilots beginning no earlier than Jan. 1, 2016, and no later than Dec. 31, 2018, according to the finalized rules. The end date, however, remains unchanged from the proposed rule.

“Many commenters cited uncertainty and the lack of lead time as negatively impacting full utilization of the pilot program and requested a longer implementation period,” the final rules said.

Another noted change to the final rules was the increase of the limited amount for wraparound coverage from $2,500 to either the maximum permitted annual salary reduction toward a health flexible spending account or 15% of the cost of coverage under the company’s primary plan.

“Many comments stated that the limits on the amount should be higher so that individuals eligible for the limited wraparound coverage would not experience gaps in coverage,” the rule notes.

Also see: Premium reimbursement relief — with a catch

As previously seen in earlier drafts, the wraparound coverage rule will also create a new category of excepted benefits. The concept of excepted benefits was created by the Health Insurance Portability and Accountability Act of 1996 and is carried forward in the Affordable Care Act. 

Excepted benefits provide benefits that resemble in some way the health benefits that have been regulated by HIPAA and are now regulated by the ACA, but are more limited or are more tangential to medical care. The excepted benefits fall into four different categories:

  • Benefits that are not generally medical benefits but do provide some medical coverage (such as workers’ compensation, and accidental death and dismemberment coverage).
  • Limited excepted benefits, such as vision, dental or long-term care.
  • Benefits that are not coordinated with medical benefits (specific disease coverage, fixed dollar indemnity coverage).
  • Coverage that is supplemental to medical coverage (such as Medicare supplement policies). 

The final rule will be published in today’s Federal Register and will come into effect 60 days from publication. 

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