Employee Assistance Programs - DOL / IRS Enforcement Actions

[youngbenefitslawyer]

Anyone aware of any DOL or IRS enforcement actions concerning employee assistance programs?  Specifically instances in which the DOL or IRS found that an EAP was not an excepted benefit?  

[Brian Gilmore]

I'm guessing you're driving at the "significant benefits in the nature of medical care" component, and particularly with respect to the upper limit of sessions.  Is it 6?  Or 12?  Or....?

That one is an enduring mystery with no good answer I've come across.  I'm not aware of any enforcement activity that might shed light on the matter.

Here's my general thoughts if you're interested:

https://www.newfront.com/blog/aca-and-hipaa-excepted-benefits

Common Excepted Benefit #4: EAP

EAPs must satisfy all of the following conditions to qualify as an excepted benefit:

• Not Significant Medical Benefits: The EAP cannot provide significant benefits in the nature of medical care;
• No Coordination with Group Health Plan: The EAP cannot be coordinated with benefits under another group health plan by meeting the following two requirements:- No Exhaustion: Participants in the other group health plan cannot be required to use and exhaust benefits under the EAP (i.e., the EAP cannot act as a gatekeeper) before becoming eligible for benefits under the other group health plan; and- No Participation Link: Participant eligibility for benefits under the EAP cannot be dependent on participation in another group health plan;
• No Premiums: The EAP cannot have an employee-share of the premium (i.e., it must be fully employer-paid); and
• No Cost-Sharing: The EAP cannot have any cost-sharing for its services (i.e., no deductibles, copays, or coinsurance).

The most difficult element to interpret is the first requirement that the EAP not provide “significant benefits in the nature of medical care.”  For example, there is no specific limit on the number of counseling sessions that the EAP can offer and still remain within this definition.  The only guidance in the regulations is a generic statement that employers are to take into account “the amount, scope, and duration of covered services.”

The best description of this “significant medical benefits” condition comes from the preamble to the excepted benefits regulations, which provides as follows:

The first requirement of…these final regulations is that the EAP does not provide significant benefits in the nature of medical care. For this purpose, the amount, scope, and duration of covered services are taken into account. For example, an EAP that provides only limited, short-term outpatient counseling for substance use disorder services (without covering inpatient, residential, partial residential or intensive outpatient care) without requiring prior authorization or review for medical necessity does not provide significant benefits in the nature of medical care. At the same time, a program that provides disease management services (such as laboratory testing, counseling, and prescription drugs) for individuals with chronic conditions, such as diabetes, does provide significant benefits in the nature of medical care."

The preamble subsequently notes that the Departments (DOL/IRS/HHS) may provide additional guidance in the future to better clarify when a program provides significant benefits in the nature of medical care.