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The Federal Government has just released two very important announcements regarding hardship exemptions for the new Patient Protection and Affordable Care Act (PPACA) and regarding proposed regulations with amendments to the excepted benefit requirements, as defined by HIPAA.

On December 19, 2013, the White House announced that people whose individual health care policy had been cancelled due to new Patient Protection and Affordable Care Act (PPACA) requirements – and believe coverage options on the new public Marketplaces are more expensive than their cancelled policy – are eligible for a hardship exemption from the individual mandate and can enroll in a catastrophic plan.

On December 20, 2013, the Departments of the Treasury, Labor and Health and Human Services issued proposed regulations with amendments to the excepted benefit requirements. Excepted benefits, as defined by HIPAA, are exempt from most HIPAA and PPACA requirements.

Hardship Exemption and Catastrophic Plans for Certain Individuals

Previously, catastrophic plans had generally been limited to individuals under age 30 or in specific situations of hardship, e.g. no affordable coverage available in their area. Catastrophic plans are not eligible for the premium subsidy, a.k.a. the Advanced Premium Tax Credit.

The individual mandate states that all Americans must have “minimum essential coverage” by January 1, 2014 or face possible penalties.

Individuals whose policies were cancelled and believe they qualify for the hardship exemption and catastrophic plan need to complete a hardship exemption form and submit related support documents. Details are available on HealthCare.gov.  The government has also set up a toll-free hotline for those needing assistance.

Amendment for Excepted Benefits

The proposed regulation amends the existing excepted benefits regulations. Key updates include:

Limited-Scope Dental/Vision – Under the prior rules, limited-scope dental/vision coverage was an excepted benefit if benefits were provided under a separate policy or were not an integral part of a group health plan. To demonstrate that the dental/vision coverage is not integral to the group health plan, the proposed rule requires only that plan participants have the opportunity to elect the dental/vision coverage separately. The requirement that employees also pay an additional premium if they elect the dental/vision coverage is eliminated. Plans can rely on the proposed regulation through at least 2014 until final regulations are issued.

Employee Assistance Plans (EAPs) – The regulation adds EAPs as a new category of excepted benefits if the EAP (1) doesn’t provide “significant” benefits for medical care; (2) doesn’t coordinate with benefits under another group health plan; (3) there are no employee contributions toward the EAP; and (4) there is no enrollee cost-sharing (copays, deductibles, coinsurance). Plans can rely on the proposed regulation through at least 2014 until final regulations are issued.

Wrap Around Coverage – Certain employer-sponsored coverage that “wraps around” a non-grandfathered individual policy is added as a new category of excepted benefits if certain criteria are met. The coverage can only be offered to employees who are offered but do not enroll in the comprehensive employer plan because the premium is unaffordable, as defined by PPACA. This change is effective for 2015 plan years.

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