How broadly federal health regulators define medical loss in upcoming regulations fleshing out healthcare reform legislation has emerged as a key pocketbook issue for insurance agents.
In recent comment letters to the Department of Health and Human Services, agent trade groups are urging the agency not to define a medical loss too rigidly in rules governing the acceptable levels of administrative costs in health insurance premiums.
Another emerging issue is the survival of limited benefit or so-called mini-med plans.
Millions of these plans are sold annually by insurance companies and by insurance agents, according to industry officials. Mini-med plans are in the limited-benefit health product category and are a cousin to critical illness policies, which pay benefits to insureds affected by certain specified medical conditions.
Under the healthcare reform legislation, health insurers cannot offer limited-benefit plans through state exchanges, and such plans do not qualify as offering “essential benefits.”
Most states exempt limited-benefit health insurance products from conventional major medical plan mandates, and some insurers avoid state benefit mandates entirely by selling mini medical only to employers with more than 50 workers.
According to one industry official, this gives HHS the “regulatory latitude to completely destroy these plans, eliminating them from the marketplace, if they choose to say that the market reforms–no annual or lifetime limits–apply to mini-med plans.”
Joel Kopperud, a director for congressional relations at the Council of Insurance Agents and Brokers, said industry officials, including CIAB staff, are meeting with HHS staff “to underscore the significance of this issue.”
If an exception of some sort is not made to mini-med plans in the forthcoming rule on annual dollar limits, nearly 1.4 million Americans could lose their health insurance until 2014, he said.
“It’s a hard position for the Administration, considering [they are] the same plans they sought to eliminate because of the low coverage limits,” Kopperud said. “I do believe the administration will find the right solution. We’re serving as a resource to their efforts as best we can, and we hope to know more soon.”
Brokers who are members of CIAB are telling the trade group that employers who sponsor these plans are trying to determine if the products are workable until 2014, when the exchanges go into effect, or if they will have a new huge expense Jan. 1, 2011 when most renewals occur, Kopperud said.
“The concept of renewing prior to Sept. 23, when the regulations become effective barring no annual or lifetime limits–is hanging in the balance,” he said.