[Code of Federal Regulations]
[Title 29, Volume 9]
[Revised as of July 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 29CFR2590.732]

[Page 624-625]
 
                             TITLE 29--LABOR
 
CHAPTER XXV--PENSION AND WELFARE BENEFITS ADMINISTRATION, DEPARTMENT OF 
                                  LABOR
 
PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLAN REQUIREMENTS--Table of Contents
 
                      Subpart D--General Provisions
 
Sec. 2590.732  Special rules relating to group health plans.

    (a) General exception for certain small group health plans. The 
requirements of this part 7 of subtitle B of title I of the Act do not 
apply to any group health plan (and group health insurance coverage 
offered in connection with a group health plan) for any plan year if, on 
the first day of the plan year, the plan has fewer than 2 participants 
who are current employees.
    (b) Excepted benefits--(1) In general. The requirements of subparts 
A and C of this part do not apply to any group health plan (or any group 
health insurance coverage offered in connection with a group health 
plan) in relation to its provision of the benefits described in 
paragraph (b)(2), (3), (4), or (5) of this section (or any combination 
of these benefits).
    (2) Benefits excepted in all circumstances. The following benefits 
are excepted in all circumstances--
    (i) Coverage only for accident (including accidental death and 
dismemberment);
    (ii) Disability income insurance;
    (iii) Liability insurance, including general liability insurance and 
automobile liability insurance;
    (iv) Coverage issued as a supplement to liability insurance;
    (v) Workers' compensation or similar insurance;
    (vi) Automobile medical payment insurance;
    (vii) Credit-only insurance (for example, mortgage insurance); and
    (viii) Coverage for on-site medical clinics.
    (3) Limited excepted benefits--(i) In general. Limited-scope dental 
benefits, limited-scope vision benefits, or long-term care benefits are 
excepted if they are provided under a separate policy, certificate, or 
contract of insurance, or are otherwise not an integral part of the 
plan, as defined in paragraph (b)(3)(ii) of this section.
    (ii) Integral. For purposes of paragraph (b)(3)(i) of this section, 
benefits are deemed to be an integral part of a plan unless a 
participant has the right to elect not to receive coverage for the 
benefits and, if the participant elects to receive coverage for the 
benefits, the participant pays an additional premium or contribution for 
that coverage.
    (iii) Limited scope. Limited scope dental or vision benefits are 
dental or vision benefits that are sold under a separate policy or rider 
and that are limited in scope to a narrow range or type of benefits that 
are generally excluded from hospital/medical/surgical benefit packages.
    (iv) Long-term care. Long-term care benefits are benefits that are 
either--
    (A) Subject to State long-term care insurance laws;
    (B) For qualified long-term care insurance services, as defined in 
section 7702B(c)(1) of the Code, or provided under a qualified long-term 
care insurance contract, as defined in section 7702B(b) of the Internal 
Revenue Code; or
    (C) Based on cognitive impairment or a loss of functional capacity 
that is expected to be chronic.
    (4) Noncoordinated benefits--(i) Excepted benefits that are not 
coordinated. Coverage for only a specified disease or illness (for 
example, cancer-only policies) or hospital indemnity or other fixed 
dollar indemnity insurance (for example, $100/day) is excepted only if 
it meets each of the conditions specified in paragraph (b)(4)(ii) of 
this section.
    (ii) Conditions. Benefits are described in paragraph (b)(4)(i) of 
this section only if--
    (A) The benefits are provided under a separate policy, certificate, 
or contract of insurance;
    (B) There is no coordination between the provision of the benefits 
and an exclusion of benefits under any group health plan maintained by 
the same plan sponsor; and
    (C) The benefits are paid with respect to an event without regard to 
whether benefits are provided with respect to

[[Page 625]]

the event under any group health plan maintained by the same plan 
sponsor.
    (5) Supplemental benefits. The following benefits are excepted only 
if they are provided under a separate policy, certificate, or contract 
of insurance:
    (i) Medicare supplemental health insurance (as defined under section 
1882(g)(1) of the Social Security Act; also known as Medigap or MedSupp 
insurance);
    (ii) Coverage supplemental to the coverage provided under chapter 
55, title 10 of the United States Code (also known as CHAMPUS 
supplemental programs); and
    (iii) Similar supplemental coverage provided to coverage under a 
group health plan.
    (c) Treatment of partnerships. [Reserved]

[62 FR 16941, Apr. 8, 1997; 62 FR 31670, June 10, 1997. Redesignated at 
65 FR 82142, Dec. 27, 2000]