QUESTION: Our company sponsors a major medical plan and a separate limited-scope dental plan, which qualifies as a HIPAA excepted benefit. Our dental plan excludes coverage for dental work (such as crowns, bridges, implants, and root canals) that started before the participant became enrolled in our plan. This appears to be a preexisting condition exclusion (PCE)—is our limited-scope dental plan permitted to have PCEs after health care reform?
ANSWER: Yes, your company’s limited-scope dental plan is permitted to have PCEs so long as the plan qualifies as a HIPAA “excepted benefit.” As background, health care reform generally prohibits group health plans from having PCEs, starting with the first plan year beginning on or after January 1, 2014. Thus, your major medical plan is prohibited from having PCEs.
However, benefits that qualify as HIPAA “excepted benefits” (including limited-scope dental plans that meet the applicable requirements—see our Checkpoint article) are not subject to this prohibition and may continue to have PCEs. Many dental plans exclude coverage of dental work that started before coverage began, and these exclusions are still permitted under health care reform so long as the plan qualifies as an excepted benefit. Furthermore, as a HIPAA excepted benefit, your dental plan is not required to offset the length of a PCE by periods of prior creditable coverage that an individual had as of the enrollment date in the plan. You should confirm that the terms and conditions of the PCEs under your limited-scope dental plan are adequately described in the plan’s SPD and other enrollment materials.
For more information, see EBIA’s HIPAA Portability, Privacy & Security manual at Sections VI.F (“Excepted Benefits: Certain Health FSAs, Dental, Vision, and Others”) and VII.A (“History of Restrictions on Preexisting Condition Exclusions”). See also EBIA’s Health Care Reform manual at Section X.B (“Prohibition on Preexisting Condition Exclusions”).
Contributing Editors: EBIA Staff.