ERIC Offers Recommendations on Proposed Changes to Excepted Benefits Definition

ERIC News Release

Washington, DC – The ERISA Industry Committee (ERIC) on March 7 offered a series of recommendations to make sure that plan sponsors may continue to make their employee assistance programs available to all of their employees.  

The proposed regulations issued in December 2013 by the Departments of Treasury, Labor, and Health and Human Services address concerns raised by ERIC that limited Employee Assistance Programs (EAPs) and similar benefits are considered group health plans and, thus, would have been required to comply with the market reform and minimum essential coverage (MEC) provisions under the Affordable Care Act (ACA), which would have disadvantaged many employees.  

“ERIC appreciates the efforts of the Departments to augment the excepted benefit rule and encourages the Departments to provide a workable definition of ‘excepted benefits’ so that employers can continue to offer these valuable programs to their employees,” said Gretchen Young, ERIC Senior Vice President for Health Policy.  

ERIC brought to the Departments’ attention that employers with EAPs often faced significant problems under the ACA.  Many EAPs are considered to be group health plans, but – because of their limited range of benefits – do not meet the ACA rules governing these plans.  Moreover, enrollment in an EAP was considered minimum essential coverage for purposes of eligibility for subsidized coverage in the Exchanges.  Thus, employees who were enrolled in an EAP would not have been eligible for subsidized coverage in an Exchange, even if they were not eligible for coverage in an employer’s health plan. 

“The only available ‘solution’ to this dilemma was for the company to either eliminate the EAP or to restrict eligibility for the EAP.  In either case, this would have hurt employees who otherwise would benefit from enrollment in the EAP,” Young said.  “Allowing EAPs to be considered ‘excepted benefits’ under certain circumstances eliminates this issue and therefore allows employees who are enrolled in an EAP, but not the employer’s major medical plan, to seek subsidized coverage in the Exchanges,” Young further explains. 

Among ERIC’s recommendations are that the Departments should provide a safe-harbor definition of the term “significant benefits.”  ERIC indicates that the safe-harbor should apply any limits on visits separately to each issue rather than in the aggregate. 

ERIC also urges the Departments to provide that any program offering wellness benefits, including a disease management program, is eligible to be considered as offering “excepted benefits” under the exclusion for EAPs that do not offer significant medical benefits, provided the wellness program otherwise meets the requirements for the EAP exclusion.  Furthermore, ERIC recommends that the Departments broaden the exclusion for diabetes counseling to include other types of counseling programs aimed at chronic diseases. 

ERIC also urges the Departments to provide that EAPs that are excepted benefits are exempt from the requirements to continue coverage under COBRA, as it requires companies to devote resources to provide a benefit that is rarely, if ever, used.

ERIC’s letter can be accessed by clicking on the link below.

ERIC Comment Letter on Excepted Benefits

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All media inquiries to The ERISA Industry Committee should be directed to:

Kelly Broadway, 202.627.1918, kbroadway@eric.org

About the ERISA Industry Committee
ERIC helps America’s largest employers stay ahead of employee benefit policy. ERIC member companies are leaders in every sector of the economy, and we represent them in their capacity as sponsors of employee benefit plans for their own workforce. Only ERIC provides the combination of intel, expertise, collaboration, and lobbying that exclusively serves the interests of large employers who provide health, retirement, and compensation benefits to their nationwide workforce.