For many employers mentioning the Affordable Care Act in the same sentence as employee benefits may cause worry of additional responsibilities. However, certain health and welfare benefits are not subject to the Patient Protection and Affordable Care Act (ACA) mandates. These are referred to as HIPAA-excepted benefits and were defined by the Health Insurance Portability and Accountability Act of 1991 (HIPAA).  

HIPAA-excepted benefits are not major medical benefits. They typically provide more independent coverage that’s limited in scope and fills gaps left by major medical coverage. Supplemental benefits are generally developed under this umbrella. 

Examples of HIPAA-Excepted Benefits

  •        Accident Insurance
  •        Disability Insurance
  •        Cancer Insurance
  •        Critical Illness Insurance
  •        Hospital and other Indemnity Insurance
  •        Dental and Vision Insurance that are separate plans from a major medical plan

HIPAA includes different requirements for each type of plan to be considered excepted.  For example, some benefits will be HIPAA-excepted only if the benefits are indemnity benefits not related to actual medical expenses. Other plans may only pay to cover expenses, like deductibles, specifically not covered by an ACA compliant major medical plan.

If your supplemental benefits are developed within the definition of HIPAA excepted benefits then the benefits mandated under the ACA do not apply.

Advantages of HIPAA-Excepted Benefits

HIPAA-excepted benefits are exempt from several requirements of the ACA, relieving you of some additional work and reporting, including:

  •        Certain ERISA Provisions
  •        Market Reforms
  •        Portability Rules
  •        Research Effectiveness (PCORI) Fee
  •        Requirement to Provide a Uniform Summary of Benefits and Coverage (SBC)


Many employers offer these benefits in addition to a High Deductible Health Plan (HDHP) as a strategy to lower overall benefits costs to both them and their employees. It may also prevent the employer’s benefit plan from becoming subject to the Cadillac tax.

Many of American Fidelity’s supplemental products are designed to be HIPAA-excepted. Reach out to your account manager to see if American Fidelity products will work with your major medical plan.