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September 21, 2010

HRB 20 - Mini-Med Plan Relief from Annual Limit Restriction Offered

Released September 21, 2010I Download as a PDF

September 21, 2010 --  One of the requirements of the Patient Protection and Affordable Care Act (PPACA) that becomes applicable to all health plans, grandfathered or not, on the 1st day of the 1st plan year beginning on or after September 23, 2010, is a requirement to remove all so-called “lifetime limitations” and “annual limitations” on essential benefits.  There is a phase-in period placed on annual limits.  From now until January 1, 2014, the following schedule applies to annual limits on the dollar value of essential benefits:

Annual Limit

Applicable to plan years between

$750,000

9/23/10 and 9/23/11

$1.25 Million

9/23/11 and 9/23/12

$2 Million

9/23/12 and 1/1/14

When the regulations were issued interpreting this provision of the PPACA, the regulators indicated that a waiver process would be established for health plans commonly referred to as “mini-med plans” or “limited medical plans.” On September 3, 2010, the HHS Office of Consumer Information and Insurance Oversight issued a Bulletin describing this process. 

Mini-med plans, or limited medical plans, refer to a low-cost class of coverage that typically includes lower annual limits than traditional full coverage.  These limited benefit plans are sometimes offered to part-time workers, seasonal workers, or volunteers, who might not otherwise afford health coverage.

Process for Obtaining Waiver

First of all, this waiver is only available to plans or policies in existence prior to September 23, 2010. The waiver is only granted one plan or policy year at a time; a waiver must be requested for each subsequent plan or policy year.  Beginning January 2, 2014, no further waivers will be allowed. 

The Bulletin does not include a specific application form.  It does indicate the application must contain the following:

  1. Terms of the plan (presumably, a certification of coverage, a summary plan description, or similar document);
  2. The number of individuals covered by the plan or policy;
  3. The annual limit contained in the plan; and
  4. The cost of coverage.

Further, the application must include a brief description of why compliance with the PPACA annual limit requirements would adversely impact participants’ ability to maintain coverage.  This is to be shown by the increased cost associated with complying with the requirement, and the decrease in participation. 

The application must include a certification, signed by the issuer or officer of the plan sponsor, affirming that the plan was in force prior to 9/23/10, and that a loss of coverage for participants would occur if the plan or policy would have to comply with the annual limit restrictions.

Generally, the application must be filed more than 30 days prior to the beginning of the plan year.  However, for plan or policy years commencing prior to November 2, 2010, the application must be filed 10 days prior to the beginning of the plan year. 

What Should An Employer or Plan Sponsor Do?

  • Employers offering insured mini-med plans should work with their insurers to seek a waiver from the annual limit. 
  • Sponsors of self-funded mini-med plans should proceed to obtain a waiver on behalf of the plan.

 

 

About the Author:  Karen R. McLeese is Vice President of Employee Benefit Regulatory Affairs for CBIZ Benefits & Insurance Services, Inc., a division of CBIZ, Inc.  She serves as in-house counsel, with particular emphasis on monitoring and interpreting state and federal employee benefits law.  Ms. McLeese is based in the CBIZ Leawood, Kansas office.

 

The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained herein is provided as general guidance and may be affected by changes in law or regulation. This information is not intended to replace or substitute for accounting or other professional advice. You must consult your own attorney or tax advisor for assistance in specific situations.

This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained herein is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

 

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