8839 / What kinds of health plans are governed by the Affordable Care Act?

Certain excepted benefits, which include standalone vision, standalone dental, cancer, long-term care insurance, Medigap insurance, certain flexible spending accounts (“FSAs”), and accident and disability insurance that make payments directly to individuals, are generally not regulated under the ACA.

Similarly, plans that only impact retirees (“retiree-only plans”) are not impacted by the ACA. Although the ACA removed the exemption for retiree-only plans and excepted benefit plans from the PHS Act, it left those exemptions in the IRC and ERISA. The preamble and footnote 2 of interim final grandfathered plan regulations explain that the exemption for retiree-only plans and excepted benefit plans still applies for those plans subject to the IRC and ERISA.

Federal regulators have determined that, with respect to retiree-only and excepted benefit plans, even though those provisions were removed by the ACA, they will read the PHS Act as if an exemption for retiree-only and excepted benefit plans were still in effect. Federal regulators have encouraged state insurance regulators to do the same, although in any given state it is possible, although unlikely, that regulators will decide to enforce the ACA mandates on all fully insured plans.