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Dec 01

Courtney Bowman

Overview of Excepted Benefits - Excepted vs Bundled Benefits

by Courtney Bowman

Traditionally, dental and vision benefits are not thought of as part of the major medical plan; however, depending on how an employer structures their benefit elections and the associated premiums, the dental and vision benefits may be subject to the same PPACA requirements as the medical plan (if they are considered “Bundled Benefits”). The impact is most directly felt with respect to the annual and lifetime dollar limits that are typically applied on dental and vision benefits.

PPACA requires health benefit plans to cover certain services deemed “essential” without annual or lifetime dollar limits. Dental and vision care provided to anyone under the age of

19 is considered part of the Pediatric Services category of Essential Health Benefits (EHBs). Therefore, plans providing oral and vision care to members under 19 years of age must comply with PPACA requirements to the extent they are not considered excepted benefits.

Who Must Comply

Self-insured grandfathered and non-grandfathered plans that provide pediatric dental and vision care coverage. Exception: if the benefit offered qualifies as an Excepted Benefit, then some PPACA requirements will not apply.

Identifying an Excepted Benefit

Excepted benefits are those that meet the following two requirements:

  1. Provided by a policy/Plan that is separately elected or rejected from the main medical policy/Plan and
  2. Require an additional premium be paid for the cost of the dental/vision benefits.

Identifying Bundled Benefits

The benefits are considered bundled benefits if (1) automatically enrolling in a medical plan also means enrollment in the dental/vision plan and/or (2) no additional premium is paid.

PPACA Impacts on Bundled Benefits

If the dental/vision benefits are a bundled offering with the medical plan, current plan designs likely will not be compliant with PPACA, specifically those that include dental benefit dollar maximums, or those that include vision hardware dollar maximums. For this reason, benefit plan designs will need to be carefully reviewed and modified to ensure that Pediatric services do not contain dollar limits. A few options for consideration are:

  1. Separate your plans to offer an adult only plan and a plan for members under 19 years old – allowing dollar limits to be retained on adult plans and removed on the other plan
  2. Design benefits to remove all annual or lifetime dollar maximums
  3. Implement other cost containment limits- non-dollar based
  4. Make modifications to elections to have the plan qualify as an excepted benefit

These options are for illustrative purposes only.

Caution: Careful analysis of resource availability for day-to-day plan management, membership demographics & benefit familiarity, and a Plan’s grandfathered status all must be taken into account when determining whether offering a stand-alone or bundled dental and/or vision benefit. Both options have their benefits and draw backs. Stand-alone benefit offerings allow the best opportunity for maintaining the traditional plan structure typically offered and understood by plan participants, but will require minor premium and enrollment election offering adjustments by the Employer. Consultation with legal and benefit advisors is recommended, especially if maintaining grandfathered status.

Disclaimer: The information contained herein is not intended to be legal advice, and while every effort has been made to ensure that the content of this legislative summary is accurate, we make no representations or warranties in relation to the information provided, and assumes no liability or responsibility for any acts or omissions based on this information. As always, we encourage you to consult with your own legal counsel prior to making any decisions regarding plan design or administration.