June 30, 2017
Opinion on BeniComp Select Plan through Pan American Life
Erica N. Cordova - VP, Legal Counsel
Does the BeniComp plan constitute a fully-insured plan that is not subject to the Section 105(h)
nondiscrimination rules?
According to BeniComp, “self-funded 105(h) plans are not currently compliant. However, BeniComp Select is a fully-insured, variable premium plan that is filed and approved by 40 states and the District of Columbia.” Despite BeniComp’s assertion that this plan is fully-insured, a review of BeniComp’s plan description for “How It Works” suggests that this plan operates like a traditional a self- insured reimbursement plan.
Because BeniComp directly invoices the company for the exact amount of the participant’s claim, plus a nominal administrative fee and $250 fixed annual premium, there is no risk shifting to make this product insurance or have the effect of insurance. Additionally, there are no other components of the program, such as life insurance or accidental death and dismemberment coverage that would have the effect of making this plan fully-insured. As stated by Doris Hughes, Executive Product Director for BeniComp Insurance Company, “the accidental death
portion…does not impact the plan’s compliance with section 105.”
As a self-insured plan, this product would be subject to the Section 105(h) nondiscrimination requirements. Since this plan inherently discriminates in favor of highly compensated individuals (executives), it would not comply with the Section 105(h) nondiscrimination rules. Accordingly, we do not recommend that you sell this product to your clients.
Does the BeniComp plan constitute an excepted benefit under the ACA that is not subject to the ACA
coverage reform and plan mandates?
According to BeniComp, “BeniComp Select meets the statutory requirements as a supplemental, excepted benefit and as such is exempt from the provisions of Part 7 of ERISA, Chapter 100 of the Code, and Title XXVII of the PHS Act, including the relevant provisions added by the ACA.” To be an excepted benefit under the ACA (and not have to comply with ACA market reforms), the plan must fit into one of the four categories: non-health or limited wraparound benefit, limited scope benefit, non- coordinated benefit, or supplemental benefit. BeniComp Select purports to be a “supplemental
benefit” which is supplemental coverage provided under insurance that is a Medicare or Tricare supplement or similar coverage designed to fill the gap. Under the regulations, “if group or individual supplemental health insurance covers items and services not included in the primary, the coverage will be considered to be designed ‘to fill gaps in primary coverage,’ for purposes of being supplemental excepted benefits if none of the benefits provided by the supplemental policy are an [essential health benefit] (EHB) in the State in which the coverage is issued. Thus, if any benefit provided by the supplemental policy is either included in the primary coverage or is an
EHB in the State where the coverage is issued, the insurance coverage would not be supplemental excepted benefits under the proposed regulations.”
The BeniComp Select executive medical reimbursement plan has difficulty fitting into the supplemental excepted benefit category because it provides essential health benefits as provided by the applicable state. A review of BeniComp Select’s list of “Covered Benefits” shows an overlap with some state Essential Health Benefits.
A few common examples of where the BeniComp Select covered benefits may overlap with the state EHB include:
Home Health Care Services | Emergency Room Services |
Emergency Transportation/Ambulance | Inpatient Hospital Services |
Inpatient Physician & Surgical Services | Inpatient Mental/Behavioral Health |
Outpatient Mental/Behavioral Health | Substance Abuse Outpatient Services |
Substance Abuse Inpatient Services | Generic Prescription Drugs |
Preferred & Non-preferred Brand Drugs | Specialty Prescription Drugs |
Chiropractic Care | Durable Medical Equipment |
Therefore, in addition to not being compliant with the Section 105(h) nondiscrimination requirements, unless this plan is integrated with the primary group health plan, it also is not ACA compliant in any state in which its covered services overlap with the state’s EHB.
Are there other compliant Executive Medical Reimbursement Plans I can offer to my clients?
Ultimate Health by ArmadaCare offers a compliant alternative. Regarding the Section 105(h) nondiscrimination rules, unlike some of the other plans on the market, the Ultimate Health plan operates like insurance in that it shifts risk in the form of premium payments. The Ultimate Health plan has premiums ranging from approximately $500 - $1500 per participant per month, compared to some other plans with a “premium” of $250 per participant per year. Additionally,
the Ultimate Health premiums are based on standard underwriting practices and dollar-for-dollar reimbursement amounts are not invoiced to the employer like other plans.
With respect to the ACA, there are certain components of the program (namely, the medical expense reimbursements) that will struggle to meet the definition of a “supplemental” excepted benefit. That being said, the Ultimate Health plan can still be ACA-compliant based on the fact that it is integrated with a group health plan that provides minimum value. As long as the Ultimate Health plan is only offered to individuals enrolled in a MV group health plan, it can be ACA-compliant.
If you have additional questions or concerns, please contact OneDigital Compliance at askcompliance@onedigital.com.