How do you know which plans are viable today? There are 3 questions to ask:
Question 1: Insurance or Self-Insured?
When medical reimbursement plans were originally introduced in the 80s, there was really only one question to ask to determine a plan’s viability: whether the plan was insured or not. This is because these plans are guided by 105(h) of the tax code:
- If self-insured or cost-plus basis, you cannot discriminate in favor of the highly compensated and keep the tax favored status.
- If insurance, you can provide reimbursements without the same concerns for non-discrimination
The 105(h) provisions continue to apply today, but the landscape is a bit more complex.
Question 2: What Type of Plan?
Now, it also matters what type of insurance plan you offer and under what definition in the Public Health Service Act that plan falls. So, the second question to ask to determine a medical reimbursement plan’s viability is: is it a “major medical” type of insurance plan or is it an excepted benefit?
Insured group plans fall into two general categories:
1. Insured group health plans that are subject to PHSA Section 2716 rules
2. Insured group health plans that fall into the category of Excepted Benefits
The ACA extended 105(h) non-discrimination rules only to those plans in the first category that are subject to PHSA Section 2716 rules. These rules do not currently apply to the second category of insured benefits that are considered Excepted Benefits.
Excepted Benefits have been addressed consistently across the interconnected laws to be just that, excepted: in terms of PHSA, ERISA, HIPAA, and ACA.
Question 3: Does it pass Excepted Benefit requirements?
The third and final question to ask relates to understanding the specific requirements for various Excepted Benefit categories. This is particularly important when you look at plans that bundle more than one Excepted Benefit into a single policy contract.
With a bundled policy, it’s important to look at each component separately as it relates to the requirements since one benefit category does not cross over to another. So for instance, if a plan combines limited scope dental, limited scope vision, and supplemental coverage, only the component related to supplemental coverage should be calculated against the Safe Harbor Guidelines issued for this type of Excepted Benefit.
Learn more about a medical reimbursement plan that passes all 3 tests and is a viable solution at ArmadaCare.com/uhsocial
Editor’s Note: Originally published November 30, 2014.