Concierge Medical Program

We have a client that would like to provide “concierge medical benefits” to all of its employees that have elected any level of medical plan coverage, which is provided under a fully-insured high deductible plan.  There are no actual medical benefits being provided via the concierge program.  Instead, the client has contracted with two geographically convenient general practitioners that will give “high” or “immediate” scheduling priority to participants, as well as much quicker response to requests for refills, etc. Actual medical expenses associated with the services will be run through the group medical plan as usual (e.g., cost of the visit, medical tests, etc.).  From the client’s description, it seems like the concierge service is merely a program to provide priority scheduling and refills. The projected cost for each employee is $2,000/year.  I am not sure if there is a different cost if the employee has elected family coverage, but in any event, it will all be employer paid.

Our practice is primarily focused on qualified and nonqualified plans, so this is out of the box for us.  At first blush, this program does not seem to be a welfare benefit plan, and I am thinking that the cost would be includable in the employee’s income.

Hoping someone has some experience with this type of program and can point us in the right direction.

I would consider that an ERISA group health plan benefit.  The payment is to medical practitioners for the purpose of accessing medical items and services.  Even though the fully insured policy will cover the underlying items/services, this service is a vehicle to access them at an accelerated rate. 

It's along the lines of a membership fee for one of the concierge services like One Medical.  I'm not aware of any definitive guidance that these types of concierge medical service fees are §213(d) medical benefits, but there's an IRS Information Letter that suggests these fees do qualify as medical expenses: https://www.irs.gov/pub/irs-wd/11-0027.pdf.  In any case, employers generally treat them as such by excluding the cost from employees' taxable income (pursuant to Internal Revenue Code §105 and §106). 

One way you could look at it is in light of how the DOL views EAPs.  Those are generally always found to be ERISA group health plans because they include services provided by trained medical professionals (in that case, mental health therapists).  If it was truly limited to non-medical concierge services it would not be an ERISA plan, but that rarely is the case.  As with here, the payments are being made to trained medical providers.

• Here's some more discussion on topic: https://www.newfront.com/blog/most-eaps-are-group-health-plans-subject-to-cobra

Here's some relevant cites:

ERISA §3(1):

(1) The terms “employee welfare benefit plan” and “welfare plan” mean any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services, or (B) any benefit described in section 302(c) of the Labor Management Relations Act, 1947 [29 USC §186(c)] (other than pensions on retirement or death, and insurance to provide such pensions).

ERISA §607(1):

(1) Group health plan. The term “group health plan” means an employee welfare benefit plan providing medical care (as defined in section 213(d) of the Internal Revenue Code of 1986) to participants or beneficiaries directly or through insurance, reimbursement, or otherwise. Such term shall not include any plan substantially all of the coverage under which is for qualified long-term care services (as defined in section 7702B(c) of such Code). Such term shall not include any qualified small employer health reimbursement arrangement (as defined in section 9831(d)(2) of the Internal Revenue Code of 1986).

ERISA §733(a):

(a) Group health plan.
For purposes of this part— 
(1) In general. The term “group health plan” means an employee welfare benefit plan to the extent that the plan provides medical care (as defined in paragraph (2) and including items and services paid for as medical care) to employees or their dependents (as defined under the terms of the plan) directly or through insurance, reimbursement, or otherwise. Such term shall not include any qualified small employer health reimbursement arrangement (as defined in section 9831(d)(2) of the Internal Revenue Code of 1986).
(2) Medical care. The term “medical care” means amounts paid for—
(A) the diagnosis, cure, mitigation, treatment, or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body,
(B) amounts paid for transportation primarily for and essential to medical care referred to in subparagraph (A), and
(C) amounts paid for insurance covering medical care referred to in subparagraphs (A) and (B) .

IRC §213(d)(1)(A):

The term “medical care” means amounts paid—

(A)  for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body,

Treas. Reg. §1.213-1(e)(1)(ii):

(ii) Amounts paid for operations or treatments affecting any portion of the body, including obstetrical expenses and expenses of therapy or X-ray treatments, are deemed to be for the purpose of affecting any structure or function of the body and are therefore paid for medical care. Amounts expended for illegal operations or treatments are not deductible. Deductions for expenditures for medical care allowable under section 213 will be confined strictly to expenses incurred primarily for the prevention or alleviation of a physical or mental defect or illness. Thus, payments for the following are payments for medical care: hospital services, nursing services (including nurse’s board where paid by the taxpayer), medical, laboratory, surgical, dental and other diagnostic and healing services, X-rays, medicine and drugs (as defined in subparagraph (2) of this paragraph, subject to the 1-percent limitation in paragraph (b) of this section), artificial teeth or limbs, and ambulance hire. However, an expenditure which is merely beneficial to the general health of an individual, such as an expenditure for a vacation, is not an expenditure for medical care.

Lauren0507, I do not know what your relationship is with the group.  I am from the wholesale side of group health, a TPA that administers self-funded medical plans.  But I found this interesting.  And BTW I agree with Brian that more than likely it is a welfare plan.

$2,000 per year per employee appears to be excessive for what the group/employees will receive.  A physician cannot assist in refills for someone who is not their patient.  So, if the concierge physician cannot assist with refills for non-patient employees, and the concierge can easily and quickly refill a script for an employee who is already a patient, what is the value?  As for the high or immediate scheduling priority, maybe some value can be given to that, but certainly not $2,000 per employee per year.

Just my 2 cents.