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Agencies Green Light Pilot Program to Allow Limited Wrap-Around Coverage for Health Insurance Policies Purchased on an Exchange


January 2015

Under proposed rules recently issued by the Departments of Treasury, Labor, and HHS, employers may participate in a pilot program where they offer certain wraparound coverage as an “excepted benefit” to part-time employees, retirees, and employees eligible for coverage under a multi-state plan. An excepted benefit is exempt from numerous requirements that apply to group health plans, including the ACA market reforms and certain requirements set forth under HIPAA. The wraparound coverage might, for example, pay for certain expenses in the exchange policy that are not considered essential health benefits, for expanded access to provider networks or other benefits that are not provided in coverage purchased on an ACA mandated exchange.

Under the pilot program, an employer may offer wraparound coverage as an excepted benefit to part-time employees or retirees to supplement health insurance coverage that they purchase an exchange, provided that certain conditions are met. The pilot program also allows an employer to offer wraparound coverage to full-time employees if they purchase a multi-state plan. Without the pilot program, the offer of wraparound coverage would jeopardize these workers’ ability to qualify for a premium subsidy for the purchase of exchange coverage. The program should be especially helpful to employers with large part-time work forces who may find it difficult to offer those employees affordable health coverage, but still wish to supplement the individual coverage that these part-time workers purchase through an exchange.

Employers may offer wraparound coverage as an excepted benefit provided that such coverage is offered no later than December 31, 2017. The employer’s provisional offer of coverage can last for the later of three years from the date that it first offers the coverage or the date on which the last collective bargaining agreement relating to the health plan ends. 

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