Excepted Benefits: Dental

An introduction to dental excepted benefits

Introduction...

This article will provide you with a brief explanation of:

• Excepted benefits
• What conditions make dental coverage is an excepted benefit
• The differences between private dental coverage and dental coverage as an excepted benefit

Main Reasons for Delayed Insurance Coverage

A common reason why consumers put off urgently needed dental care is a delay before their insurance will pay for the procedure. The three main reasons for delays in coverage are:

• The dental policy's effective date
• Attaching waiting periods to various benefits
• Deductibles

This article will educate you on the conditions delaying insurance coverage and then list examples of dental plans that lack waiting periods.

What Are Excepted Benefits?

Before explaining an excepted benefit, it is necessary to define a regular benefit. A benefit is an employer-provided compensation (other than wages) given to an employee as part of his or her employment. A classic example of an employee benefit is health insurance provided by the employer. Benefits are something of value provided by an employer to an employee apart from the payment of salary or wages.

Employee benefits like health insurance are typically regulated under The Employee Retirement Income Security Act of 1974 (ERISA). ERISA "is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans."2 An ERISA health plan must follow the rules and regulations associated with ERISA but also comply with related laws and regulations such as HIPAA. Excepted benefits are employer-provided benefits that are excepted (i.e. provided exceptions) from compliance with some portion of health laws.3

There are four categories of excepted benefits:

• Benefits that are not considered health benefits (e.g. automobile liability insurance, workers compensation)
• Benefits that are limited scope health benefits but are not integrated into primary medical coverage for employees (e.g. dental and vision insurances)
• Benefits that are health benefits but are independent and not coordinated with primary medical coverage for employees (e.g. specific disease insurance such as cancer insurance)
• Benefits that are supplemental to health coverage and offered through a separate policy than primary medical coverage (e.g. Medicare supplement insurance)

The National Association of Insurance Commissioners1 have identified a variety of insurances that would be considered an excepted benefit when provided by an employer to an employee:

• Accident-only insurance
• Automobile liability insurance
• Dental insurance
• Disability income insurance
• Hospital indemnity insurance
• Long-term care insurance
• Medicare supplement insurance
• Nursing home care insurance
• Specified disease or illness insurance
• Vision insurance
• Workers compensation

When Is Dental Coverage an Excepted Benefit?

Dental insurance is an excepted benefit when it is provided by an employer to an employee but the dental insurance is not integrated within the employer’s primary medical coverage. As a limited scope health benefit managed under a separate insurance policy from an employer’s primary medical coverage, dental coverage is considered an excepted benefit. If dental benefits are provided within an employer’s primary medical coverage then the dental benefits are not excepted.

Private Dental Insurance vs. Dental Excepted Benefits

Private dental insurance refers to dental insurance purchased by a consumer for his or her own coverage (or family coverage). Private dental insurance is contrasted to group dental insurance purchased by a company (or organization) for its employees.

In private dental insurance, the only other people who may be enrolled under the same policy are children (including adopted children) and a spouse. Unrelated people cannot join family coverage in a private dental plan. In Dental excepted benefits, the dental insurance is a group policy offered to employees (and possibly their dependents). A non-employee (other than an employee’s dependents) may not be covered by the excepted benefits.

Since excepted benefits are part of a group insurance plan, the cost of these benefits may be lower than would be the case if the employee had purchased the same dental benefits through a private dental insurance plan. However, a private dental insurance plan can be renewed over and over again at the discretion of the purchaser. If an employee, however, has dental benefits through an employer then those benefits will discontinue after the employee stops working for the company (albeit with the possibility of a temporary extension through COBRA).

¹ William G. Schiffbauer, “ FEDERAL LAW DISTINGUISHES EXCEPTED BENEFITS FROM COMPREHENSIVE, MAJOR MEDICAL HEALTH INSURANCE COVERAGE,” National Association of Insurance Commissioners
² " Employee Retirement Income Security Act (ERISA)," U.S. Department of Labor,
³ Alden Bianchi, " Departments of Labor, Health and Human Services, and Treasury Issue Proposed Regulations Governing “Excepted Benefits,” Mintz Levin, February 3, 2014