Is an employee assistance program (EAP) subject to COBRA? Is it considered an excepted benefit under the PPACA?

An  employee assistance program (EAP) is subject to COBRA if it meets the definition of a group health plan. COBRA defines a group health plan as a plan that the employer maintains or supports and which provides some type of medical care. The law generally applies to all group health plans maintained by private-sector employers with 20 or more employees, or by state or local governments. The law does not apply to plans sponsored by the federal government or by churches and certain church-related organizations. In addition, many states have laws similar to COBRA (sometimes called mini-COBRA), including those that apply to health insurers of employers with fewer than 20 employees. Information on these mini-COBRA laws is available from a state's insurance department.

The employer does not have to contribute any funding to an EAP for it to be considered an employer-sponsored health plan. However, if the EAP is just a referral service, it would not be considered a group health plan and would not be subject to COBRA. For example, an employee who exhibited a dramatic change in behavior is referred to the company's EAP. The employee uses the EAP hotline and engages in a discussion with a psychologist who schedules an appointment with her. In this scenario, the company's EAP meets the criteria of an employer-sponsored health plan because the employee is receiving counseling from a trained professional. If, however, the EAP hotline only gave the employee a list of psychologists in her area, it would not meet the criteria for a health plan.

The Patient Protection and Affordable Care Act (PPACA, or ACA) also addresses the issue of whether an EAP is a group health plan or is an "excepted benefit" in that it does not provide significant medical care and is therefore exempt from most of the ACA rules. The Departments of Treasury, Labor, and Health and Human Services, which are responsible for implementing the ACA, have issued final regulations that set forth criteria for when an EAP would not be considered a group health plan and, therefore, would not be subject to the ACA's group health plan mandates.

Under the regulations, an EAP would not be subject to the ACA's group health plan mandates provided it satisfies the following requirements:

• It does not provide "significant" medical care benefits.
• The benefits under the EAP cannot be coordinated with benefits under another group health plan. For example, participants in the other group health plan must not be required to exhaust benefits under the EAP (e.g., a gatekeeper EAP) before an individual is eligible for benefits under the other group health plan.
• No employee premiums or contributions may be required as a condition of participation in the EAP.
• There is no cost-sharing for benefits provided through the EAP.

An employer that sponsors an EAP should use the above criteria to determine whether its EAP is in fact an excepted benefit under the ACA.