Federal Agencies Consider Limits to Critical Illness Policies
In June 2016, the Internal Revenue Service, Employee Benefits Security Administration and Centers for Medicare & Medicaid Services published proposed regulations that could limit critical illness insurance policies.
The Patient Protection and Affordable Care Act (ACA) and other healthcare regulations have considered fixed indemnity policies, such as critical illness insurance, “excepted benefits.” These policies do not have to meet minimum essential coverage, minimum value standards and other federal plan design rules. The recently proposed regulations, which implement provisions of the Expatriate Health Coverage Clarification Act of 2014 (EHCCA), outline standards supplemental health insurance policies would need to meet to be considered “excepted benefits.”
The Departments are “…concerned that individuals who purchase a specified disease policy covering multiple diseases or illnesses …may incorrectly believe they are purchasing comprehensive medical coverage when, in fact, these polices may not include many of the important consumer protections under the PHS Act, ERISA, and the [IRS] Code.”
The Departments are soliciting public comments on whether critical illness policies should limit coverage to one or two diseases. They also seek input on whether consumers need protections to ensure they do not mistake indemnity policies , such as critical illness insurance, for comprehensive medical coverage. For example, the Departments are seeking comments on whether to limit the number of diseases or illnesses a specified disease policy can cover or whether issuers should be required to disclose that such policies are not minimum essential coverage.
Critical illness policies provide valuable benefits that supplement, rather than replace, major medical plans. Limiting them would do a disservice to consumers. For more information, please contact us.
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Federal Agencies Consider Limits to Critical Illness Policies
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