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December 20, 2010

HRB 26 - Mini-Med Plans: Increased Transparency and Disclosure

Released December 20, 2010I Download as a PDF

December 20, 2010 --  The HHS’ Office of Consumer Information and Insurance Oversight (OCIIO) recently issued two bulletins relating to mini-med plans that seek a waiver from complying with the PPACA’s ban on the imposition of annual or lifetime limits on essential benefits. Our prior Heath Reform Bulletin, Mini-Med Plan Relief from Annual Limit Restriction Offered, describes the waiver process. It is important for employers to understand that if a "mini-med plan" or a "limited benefit plan" has obtained a waiver from the annual limit requirement, a participant disclosure notice must be provided. Generally, this notice will be issued by the insurer. An OCIIO bulletin, issued December 9, 2010, sets forth some details relating to this disclosure.

Participant Notification

As a condition for receiving a waiver of the annual limits requirement, plans are required to notify participants that the plan does not meet the restricted annual limits for essential benefits. Such notice must include the dollar amount of the annual limit, along with a description of the plan benefits to which it applies. The OCIIO provides the following model language that can be used by plans. This notice must be displayed prominently in clear, conspicuous 14-point bold type, on the front of plan materials:

The Affordable Care Act prohibits health plans from applying arbitrary dollar limits for coverage for key benefits. This year, if a plan applies a dollar limit on the coverage it provides for key benefits in a year, that limit must be at least $750,000.

Your health insurance coverage, offered by [name of group health plan or health insurance issuer], does not meet the minimum standards required by the Affordable Care Act described above. Instead, it puts an annual limit of:

[dollar amount] on [all covered benefits]

and/or

[dollar amount(s)] on [which covered benefits – notice should describe all annual limits that apply].

In order to apply the lower limits described above, your health plan requested a waiver of the requirement that coverage for key benefits be at least $750,000 this year. That waiver was granted by the U.S. Department of Health and Human Services based on your health plan’s representation that providing $750,000 in coverage for key benefits this year would result in a significant increase in your premiums or a significant decrease in your access to benefits. This waiver is valid for one year.

If the lower limits are a concern, there may be other options for health care coverage available to you and your family members. For more information, go to: www.HealthCare.gov.

If you have any questions or concerns about this notice, contact [provide contact information for plan administrator or health insurance issuer].

[For plans offered in States with a Consumer Assistance Program] In addition, you can contact [contact information for consumer assistance program].

Timing of Notice

  1. For plans already approved for a waiver, or would receive a waiver for plan years beginning prior to February 1, 2011, the notice must be provided to current and eligible participants by February 7, 2011.
  2. For waivers covering plan years that begin on or after February 1, 2011, the notice must be provided to eligible participants as part of any plan materials, including summary plan descriptions.

Additional Guidance

In addition, the OCIIO issued a supplemental bulletin clarifying that only in two circumstances may so-called "mini-med plans" be issued after September 23, 2010. These limited circumstances are:

  1. Situations in which a state requires a limited medical plan to be offered, and the state has sought a waiver for these products; or
  2. A group plan that has obtained a waiver transfers from one insurer to another, without loss of grandfathered status (see Amendment to Grandfathered Health Plan Rules).

 

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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