In December, the US Department of Labor's Employee Benefits Security Administration issued guidelines to its national and regional offices (Field Assistance Bulletin 2007-04) on "supplemental coverage," a form of health insurance covering co-pays and deductibles in regular insurance. Supplemental coverage is generally used to fill such gaps in either Medicare or Tricare, the health-care plan for current and retired military members. But in recent years, some employers have incorporated a form of supplemental insurance into their wellness programs.
Last July, federal agencies finalized rules granting some exceptions from HIPAA to certain wellness programs. Under the rules, employers can offer financial incentives of as much as 20% of the cost of covering an employee. Popular are discounts to nonsmokers or contributions toward insurance premiums for workers who complete health-risk assessments or have their blood pressure checked.
The new Field Assistance Bulletin establishes an enforcement safe harbor under which supplemental health insurance will be considered excepted benefits for purposes of the health reform provisions in Part 7 of ERISA. Similar supplemental coverage that does not meet the standards for the safe harbor may be subject to enforcement actions by the department.
To fall within the safe harbor, to be similar supplemental coverage, a policy, certificate, or contract of insurance must meet the standards in four criteria detailed in the safe harbor: (1) independent of primary coverage, (2) supplemental for gaps in primary coverage, (3) supplemental in value of coverage, and (4) similar to Medicare supplemental coverage. This guidance has been coordinated with the Departments of Treasury, and Health and Human Services.