New Reporting Requirement for Employer-Sponsored Wraparound Coverage

CMS has imposed a new reporting requirement on employers who sponsor wraparound coverage. Few employers will be impacted by the new requirement as wraparound coverage is a specific type of coverage that is rarely offered.

As background, wraparound coverage was introduced in 2015 as a new type of excepted benefit. As an excepted benefit, it's exempt from certain ACA insurance mandates (such as the essential health benefits requirement and the prohibition on lifetime and annual dollar limits) and HIPAA portability (including special enrollment rights).

Wraparound coverage must supplement either non-grandfathered/non-grandmothered individual or multi-state plan coverage. The plan must provide meaningful coverage beyond general cost sharing. The cost of the wraparound coverage must be no more than the greater of the annually indexed health FSA employee contribution limit ($2,650 in 2018) or 15 percent of the cost of the employer's primary medical plan. Importantly, the employees who are eligible for the wraparound coverage must either be retired employees or employees who are not reasonably expected to be full-time (i.e. part-time employees). They must be offered non-excepted coverage by the employer. Further, the employer must still offer full-time employees the opportunity to enroll in minimum value, affordable employer-sponsored medical coverage. Lastly, the coverage must first be implemented between Jan. 1, 2016 and Dec. 31, 2018 and be in effect for no more than three years.

The one-time reporting requirement is due within 60 days after the publication of the form (on June 25) or 60 days after the first of the plan year that the coverage is offered, whichever is earlier. The Wraparound Coverage Reporting Form will collect the following information: the type of coverage that is supplemented (individual or multi-state plan); who is eligible to enroll; number of enrolled; and additional benefits provided by the coverage (for example, services such as home health care or access to an onsite health clinic at no cost).

While wraparound coverage has been available since 2016, very few employers have implemented such coverage because of the limited application. It's really only beneficial for employers wanting to help supplement individual coverage purchased by non-full-time employees who are already eligible for one of the employer's medical plans. Employers are generally not required to offer any type of coverage to such employees. Thus, most employers do not sponsor such a plan and will not be impacted by this new requirement.

Wraparound Coverage Reporting Form »