Employers of all sizes are offering enhanced health benefits, or carve-out coverage, to a select group of employees as part of a smart, compliant strategy for how to achieve their recruitment and retention goals.

Old Plans Exiting the Market

When the Affordable Care Act (ACA) was put in place, there were several sweeping and complex changes to the healthcare system. The older executive medical reimbursement plans (like Exec-U-Care) that were structured as modified primary health plans could not meet requirements of the ACA, such as prohibition on annual benefit limits. Many issuers of these products elected to discontinue these plans, rather than restructure them.

Old Plans Exiting the Market

When the Affordable Care Act (ACA) was put in place, there were several sweeping and complex changes to the healthcare system. The older executive medical reimbursement plans (like Exec-U-Care) that were structured as modified primary health plans could not meet requirements of the ACA, such as prohibition on annual benefit limits. Many issuers of these products elected to discontinue these plans, rather than restructure them.

Non-Discrimination Rules Don’t Apply to Excepted Benefits

The ACA also added a provision to the Public Health Services Act (Section 2716) that extends 105(h) like nondiscrimination rules to insured “group health plans.” This caused many to interpret nondiscrimination to apply to all insured health benefits.

However, what was generally overlooked is that “group health plan” has a distinct definition in the Public Health Services Act, a definition that is separate and apart from other insured group health plans that are considered excepted benefits. This distinction is meaningful when it comes to the viability of offering supplemental health benefits to just select groups of employees.

In addition, ArmadaCare’s insurance plans are non-contributory, 100% employer-paid with the employer selecting the enrollment class, so Section 125 non-discrimination rules would not apply.

Non-Discrimination Rules Don’t Apply to Excepted Benefits

The ACA also added a provision to the Public Health Services Act (Section 2716) that extends 105(h) like nondiscrimination rules to insured “group health plans.” This caused many to interpret nondiscrimination to apply to all insured health benefits.

However, what was generally overlooked is that “group health plan” has a distinct definition in the Public Health Services Act, a definition that is separate and apart from other insured group health plans that are considered excepted benefits. This distinction is meaningful when it comes to the viability of offering supplemental health benefits to just select groups of employees.

In addition, ArmadaCare’s insurance plans are non-contributory, 100% employer-paid with the employer selecting the enrollment class, so Section 125 non-discrimination rules would not apply.

Still a Viable Option

The decision of some plans to exit the market, coupled with the misunderstanding of new nondiscrimination rules, created confusion and misunderstanding in the market that employers can no longer boost benefits selectively. While the landscape has changed, strong supplemental insurance plans geared toward leadership and other key talent are still viable options.

You can still attract and retain “the best and the brightest” employees by selectively enhancing their benefit program with a medical reimbursement plan that qualifies as an excepted benefit since it is not restricted by the ACA.

To learn more about this topic, please contact us to request a copy of the white paper, Why Offering Carve-Out Coverage Remains a Viable Option.

Still a Viable Option

The decision of some plans to exit the market, coupled with the misunderstanding of new nondiscrimination rules, created confusion and misunderstanding in the market that employers can no longer boost benefits selectively. While the landscape has changed, strong supplemental insurance plans geared toward leadership and other key talent are still viable options.

You can still attract and retain “the best and the brightest” employees by selectively enhancing their benefit program with a medical reimbursement plan that qualifies as an excepted benefit since it is not restricted by the ACA.

To learn more about this topic, please contact us to request a copy of the white paper, Why Offering Carve-Out Coverage Remains a Viable Option.