HIPAA's Portability and Nondiscrimination Rules

[Guest enelson]

Does HIPAA's portability (certificates of creditable coverage) and nondiscrimination (health status related factors) rules apply to cafeteria plans? If so, how so? Or is it the case that such rules apply to certain benefits offered under cafeteria plans such as a health fsa? If so, how so? Thanks.

[KJohnson]

Are FSA’s Subject To HIPAA’s Portability, Special Enrollment And Non-Discrimination Provisions?

Under 62 Fed. Reg. 67687 (December 29, 1997) a Health FSA will not be subject to HIPAA’s portability, special enrollment, and non-discrimination rules if:

(a) The employee has other group health coverage available for the year from the employer (to ensure compliance with this rule, the eligibility requirements for the Health FSA and the group health plan should be the same to insure such coverage);

(b) The other group health coverage does not consist solely of benefits excepted from HIPAA;

© The maximum benefit payable from the Health FSA does not exceed the larger of:

(i) Two times the employee’s salary reduction election; or

(ii) The amount of the employee’s salary reduction for the year plus $500.

The maximum benefit condition essentially means that, to be an excepted benefit under HIPAA, the employer should never match more than 100% of the participant’s salary reduction to a Health FSA.