The IRS has released final regulations (T.D. 9697) that amend the regulations originally issued under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) regarding excepted benefits, including dental and vision benefits.
The new rule also expands the definition of excepted benefits to include employee assistance programs (EAPs). Under HIPAA, excepted benefits are generally exempt from the health care reform requirements of the Affordable Care Act (ACA). Following passage of the ACA, employers, employees and other stakeholders expressed their view that past HIPAA definitions should be updated in light of new ACA standards.
The final rule amends current regulations to treat EAPs meeting certain conditions as excepted benefits. EAPs are typically free programs offered by employers that can provide a wide range of benefits to address circumstances that might otherwise adversely affect employees' work and health.
Examples include short-term substance abuse or mental health counseling or referral services, and financial counseling and legal services. Under the final regulations, EAPs are considered excepted benefits if the program is free to employees, if EAP benefits are not coordinated with benefits in a group health plan and if the EAP does not provide significant benefits in the nature of medical care or treatment.
Similarly, under the final regulations, vision and dental benefits provided by employers on a self-insured basis qualify as excepted benefits, even if they do not require contributions from employees. Insured vision and dental benefits, as well as self-insured vision and dental coverage that requires employee contributions, already qualify as excepted benefits.
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