Proposed regulations - Health insurance “excepted benefits” for certain “wraparound coverage” 

December 20: The Treasury Department and IRS today, together with the Labor Department and Department of Health and Human Services, released for publication in the Federal Register proposed regulations (REG-143172-13) that would amend existing regulation concerning “excepted benefits”—i.e., exempt from the health reform requirements of the 2010 health care reform law.

Read the proposed regulations [PDF 264 KB]

These proposed regulations would treat certain “wraparound coverage” provided under a group health plan as excepted benefits when offered to individuals who could receive such benefits through their group health plan if they could afford the premiums, but who do not enroll in an employer-sponsored plan because the premium is unaffordable under the law.

Such wraparound coverage would only qualify as excepted benefits under limited circumstances.

The proposed regulations describe the circumstances under which employer-provided wraparound coverage would constitute excepted benefits (limited wraparound coverage) and therefore would not disqualify an employee from eligibility for the premium tax credit and cost-sharing reductions. The preamble states that providing excepted benefits will not satisfy an applicable large employer’s responsibilities under section 4980H. The proposed regulations list five conditions to satisfy for limited wraparound coverage to be an excepted benefit.

These rules are proposed to be effective for plan years starting in 2015.

The proposed regulations will be published in the Federal Register on December 24, 2013, and comments are due on or before a date that is 60 days from December 24.

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