Can a Limited-Scope Dental Plan Exclude Coverage for Pre-Existing Conditions?
Question: Our company sponsors a major medical plan and a separate limited-scope dental plan, which qualifies as an excepted benefit under the Health Insurance Portability and Accountability Act (HIPAA). 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 pre-existing condition exclusion (PCE). Is our limited-scope dental plan allowed to have PCEs under the Affordable Care Act (ACA)?
Answer: Yes, your company’s limited-scope dental plan is permitted to have PCEs — as long as the plan indeed qualifies as a HIPAA “excepted benefit.” The ACA 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.
But benefits that qualify as HIPAA “excepted benefits” (including limited-scope dental plans that meet the applicable requirements) aren’t subject to this prohibition and may continue to have PCEs.
Furthermore, as a HIPAA excepted benefit, your dental plan isn’t required to offset the length of a PCE by periods of prior creditable coverage that an individual had as of the plan’s enrollment date. You should, however, confirm that the terms and conditions of the PCEs under your limited-scope dental plan are adequately described in your plan’s summary plan description and other enrollment materials.
Anthony Munns, Partner, IT Audit and Security Services, at 314.983.1297 or firstname.lastname@example.org