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June 22, 2011

HRB 35 - Update: Mini-Med Plan Waivers

Released June 22, 2011I Download as a PDF

June 22, 2011 --  One of the requirements of health care reform contained in the Patient Protection and Affordable Care Act (PPACA) is that health plans, both grandfathered and non-grandfathered, can impose no annual or lifetime limits on essential benefits.  While the law requires no annual limits, there is a phase-in period for compliance with this requirement between now and 2014.  During this time, a plan can impose limits in accordance with the following schedule:

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”.  HHS would waive compliance with the annual limit provision if such restriction would result in a significant decrease in access or benefits, or a significant increase in premium.

To date, essential health benefits have not been defined; though, the law does provide classification types of coverage that would constitute essential coverage:

  1. Ambulatory patient services;
  2. Emergency services;
  3. Hospitalization;
  4. Maternity and newborn care;
  5. Mental health and substance use disorder services, including behavioral health treatment;
  6. Prescription drugs;
  7. Rehabilitative and habilitative services and devices;
  8. Laboratory services;
  9. Preventive and wellness services and chronic disease management; and
  10. Pediatric services, including oral and vision care.

It is believed that the viability of certain plans would be jeopardized by the imposition of the annual and lifetime limit requirements.  In order to preserve health benefits for individuals covered by these types of plans, between now and 2014 when it is anticipated that expanded coverage would be more available, a waiver process was established.  In September, 2010, the HHS’ Center for Consumer Information and Insurance Oversight (CCIIO) issued guidance on how a plan requests a waiver (see Mini-Med Plan Relief from Annual Limit Restriction Offered).

On June 17, 2011, the CCIIO issued supplemental guidance, Concluding the Annual Limit Waiver Application Process, relating to waivers (new application forms, extension forms and instructions are here).

  • No New Waivers.  The CCIIO will no longer accept applications for new waivers after September 22, 2011.  Plans applying for a new waiver must complete and submit the Waiver Application, and submit a signed attestation. New Applicants applying for a waiver must submit the waiver application form, attestation, and any supplemental information by e-mail to “AnnualLimitWaiver@cms.hhs.gov” (use “New Waiver Application” as the subject of the email).

As of June 17, 2011, CCIIO will stop accepting waiver applications based on prior CCIIO application forms. CCIIO will begin accepting applications from New Applicants on June 24, 2011. The deadline for receipt of new waiver applications is September 22, 2011. Waiver applications received from a New Applicant after September 22, 2011 will not be accepted.

  • Extension of Existing Waivers.  Plans that have received a waiver relating to the $750,000 limit for a plan years between September 23, 2010 and September 23, 2011, can request an extension of its waiver by completing a Waiver Extension form, and providing the following:
  1. Updated contact information of the applicant;
  2. Enrollment information;
  3. The plan’s stated current annual limit; and
  4. A signed attestation.  

Entities requesting the extension must submit the Waiver Extension form and attestation by e-mail to ”AnnualLimitExtension@cms.hhs.gov” (use “Waiver Extension” as the subject of the e-mail).

CCIIO will begin accepting elections for Waiver Extensions on June 24, 2011. The deadline for receipt of Waiver Extension forms is September 22, 2011. Elections for a Waiver Extension received after September 22, 2011 will not be accepted. Plans that do not elect a Waiver Extension will be required to comply with the annual limit restrictions.

Plans may elect to extend an existing waiver until January 1, 2014. A Waiver Extension applies only to plan years between September 23, 2011 and January 1, 2014. Beginning on or after January 1, 2014, all plans will have to comply with annual and lifetime limit requirements.

In addition, both new and existing applicants requesting extensions are subject to:

  • An Annual Reporting Requirement. The annual report must be submitted to CCIIO  by December 31, 2012; the second annual report must be submitted by December 31, 2013; and
  • A Recordkeeping Requirement. Records must be maintained to substantiate or prove information contained in the waiver application. 

Annual Notice Requirement

As a condition of maintaining waiver status, plans are required to annually notify affected individuals that the plan does not meet the restricted annual limits for essential benefits.

The Annual Notice must be provided to eligible participants, and included in plan materials that describe the terms of coverage, such as summary plan descriptions, for each plan year for which the waiver applies. Below are the timeframes for providing the Annual Notice:

  • New Applicants approved after June 17, 2011 for plan years between September 23, 2010 and September 23, 2011 that do not meet the $750,000 annual limit requirement;
  • Each plan year for a New Applicant or entity receiving a Waiver Extension between September 23, 2011 and September 23, 2012 that do not meet the $1.25 million annual limit requirement; and
  • Each plan for a New Applicant or entity receiving a Waiver Extension between September 23, 2012 and January 1, 2014 that do not meet the $2 million annual limit requirement.

Model Notice Language

Following is updated model language that must be used to notify affected participants.  This language must be prominently displayed in clear, conspicuous, 14-point bold type on the front of plan materials:

The Affordable Care Act prohibits health plans from applying dollar limits below a specific amount on coverage for certain benefits. This year, if a plan applies a dollar limit on the coverage it provides for certain benefits in a year, that limit must be at least [$750,000/$1.25 million/$2 million, as applicable].

Your health 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. Your coverage has 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].

This means that your health coverage might not pay for all of the health care you expenses you incur. For example, a stay in a hospital costs around $1,853 per day. At this cost, your insurance would only pay for [insert amount] days.

Your health plan has requested that the U.S. Department of Health and Human Services waive the requirement to provide coverage for certain key benefits of at least [$750,000/ $1.25 million/ $2 million, as applicable] this year. Your health plan has stated that meeting this minimum dollar limit this year would result in a significant increase in your premiums or a significant decrease in your access to benefits. Based on this representation, the U.S. Department of Health and Human Services has waived the requirement for your plan until [the ending date of the plan or policy year beginning before January 1, 2014].

If you are concerned about your plan’s lower dollar limits on key benefits, you and your family may have other options for health care coverage. 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].

Stand-alone HRAs

There is an outstanding question about whether the annual and lifetime limit requirements of the PPACA apply to health reimbursement arrangements (HRAs).  HRAs integrated with health plans that comply with the PPACA are not required to satisfy the annual and lifetime limits, according to the interim final regulations. HRAs that only reimburse HIPAA-excepted benefits, such as dental or vision coverage, need not comply, nor do retiree-only HRAs, those that only cover retirees.  It is unclear whether stand-alone HRAs that reimburse medical expenses other than those described above, must comply.  Therefore, plan sponsors of stand alone HRAs may want to consult with their legal counsel about obtaining a waiver.

Prior Health Reform Bulletins related to Mini-Med Plans:

 

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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