The Department of Health and Human Services’ (HHS) Office of Consumer Information and Insurance Oversight (OCIIO) has released two sets of additional guidance on the handling of limited benefit “mini med” health insurance plans. The new health care law imposes certain limitations on restricting the annual dollar limits for essential health coverage. Under the Affordable Care Act, these annual limit restrictions will be gradually phased out, and by 2014, all employer plans and new individual market health plans will be prohibited from imposing such dollar value limitations. These restrictions impact limited benefit plans known as “mini med” health plans that usually offer low-cost coverage but often include annual limits below the required threshold. To preserve such plans, which are usually used by low-wage, part-time, and seasonal employees, the HHS’s interim federal regulations set forth a program whereby the restricted annual limit requirements would be waived if compliance with the restrictions would result in a significant decrease in access to benefits or a significant increase in premiums. This waiver program will be in place until 2014. The most recent guidance documents on this program – OCIIO Supplemental Guidance on Consumer Notices on Waivers of the Annual Limits Requirements (pdf) and OCIIO Supplemental Guidance on Sale of New Business by Issuers Receiving Waivers (pdf) – address 1) notification requirements to plan participants and 2) the limited circumstances in which insurers can continue to sell mini-med programs that are effective on or after September 23, 2010.

Notice Requirements

Mini-med plans that have received annual limit waivers must inform consumers that their health care coverage plans have lower annual dollar limits than that required under the Affordable Care Act. The consumer notice must include the dollar amount of the annual limit along with a description of the plan benefits to which the limit applies. This notice must be prominently displayed in clear, conspicuous 14-point bold type as a part of any informational or education materials, as well as in plan or policy documents provided to enrollees. Moreover, the notice must specify that the waiver was granted for one year only. Model notice language is included in the guidance. For plans or issuers that have already been approved for a waiver for plan or policy years that begin before February 1, 2011, or that will receive approval for plans that begin before February 1, 2011, the notice must be provided to current and eligible participants by February 7, 2011.

Sales Limitations

The new guidance outlines the limited circumstances under which insurers that have obtained an annual waiver can continue to sell new mini-med plans that are effective on or after September 23, 2010. First, insurers offering coverage in states that had laws mandating the availability of mini-mid policies before September 23, 2010 and obtained a waiver of the annual limit requirements may continue to sell those policies to individuals and groups through September 23, 2011. These policies may not be sold after September 23, 2011 unless the state, or issuers in the state, obtains a new waiver. Second, in certain instances, an employer that already offers a mini-med policy with a waiver may buy a new mini-med plan from a different insurer. As stated in the guidance, the circumstances under which a plan sponsor may purchase a new policy with annual limits below the level specified in the grandfathered plan regulations but before September 23, 2011 are as follows:

• In all cases, the plan sponsor must have been offering group health insurance coverage to its employees before September 23, 2010, for which the issuer had obtained from HHS a waiver of the annual limits requirement;
• The new issuer from which the group health plan will obtain the new policy must have obtained a waiver from HHS for the new policy;
• In the situation where an issuer is no longer offering the coverage the plan sponsor had before September 23, 2010, the plan sponsor may obtain a replacement policy with a lower annual limit only if other comparable coverage with the same level of annual limits as the prior policy is not available;
• Except in the situation outlined in the previous bullet point, the annual limits of the new policy may not be lower than the annual limits of the previous policy.

In addition, “[a]ny health insurance issuer of new waivered coverage to a group plan sponsor must obtain from the plan sponsor an attestation that the criteria outlined above are satisfied, and the attestation must be accompanied by a copy of the prior policy outlining the terms of the prior coverage.”

Additional guidance materials issued by the HHS on the annual limit waiver program can be found here.

This entry was written by Ilyse Schuman.