Insurers that have received permission to continue offering mini-med plans have about 60 days to notify customers that the plans offer only limited benefits.
The U.S. Department of Health and Human Services (HHS) also is imposing curbs on sales of new mini-med plans that appear to be likely to violate the new federal Affordable Care Act restrictions on annual and lifetime benefits limits.
The Office of Consumer Information and Insurance Oversight (OCIIO), an arm of HHS, says HHS is issuing guidance imposing the curbs because of reports that some insurers were intending to issue new mini-med policies after Sept. 23, 2010.
Federal agencies have defined a “mini-med plan,” or “limited-benefit health plan,” as a plan that offers insureds $250,000 or less in total annual benefits.
The Affordable Care Act — the legislative package that includes the Patient Protection and Affordable Care Act (PPACA) – is set to ban lifetime health plan benefits limits in plan years starting in 2011 and restrict use of annual limits. For ordinary health insurance plans, the minimum annual limit will be $750,000 for plan years starting from Sept. 23, 2010, to Sept. 22, 2011. The minimum annual limit will increase to $1.25 million Sept. 23, 2011, and to $2 million Sept. 23, 2012.
The Affordable Care Act will ban use of annual limits in plan years starting in 2014, when a new system of health insurance exchanges is supposed to help individuals and small groups buy subsidized health coverage on a guaranteed-issue, community-rated basis.
Mini-med plan experts say low-limit indemnity health insurance products, such as critical illness insurance and hospital indemnity insurance, fall outside the scope of the rules. The rules do apply to mini-med products sold as an alternative to major medical coverage.
HHS has granted temporary benefit limits rule waivers to about 200 mini-med plans that will violate the benefit limits rules.
The purpose of the waiver authority is “not to permit new non-compliant insurance policies to be sold, but, for the period prior to 2014, to minimize disruption of existing coverage, or in some cases State-established markets, where the application of restrictions on annual limits would significantly decrease access to, or the costs of, existing coverage,” Steven Larsen, director of the OCIIO insurance oversight office, says in a memo giving the mini-med sales restriction guidelines.
“HHS generally will grant waivers of the annual limit requirements solely for the purpose of maintaining coverage sold before September 23, 2010,” Steven Larsen, director of the OCIIO insurance oversight office, says.
HHS may continue to permit new mini-med sales when an employer with an existing, grandfathered mini-med plan wants to coverage issuers.
Up until Sept. 23, 2011, HHS also will permit the sale of low-limit, “bare-bones” policies that are required by state law.
“These policies may not be sold after September 23, 2011, unless the State, or issuers in the State, obtains a new waiver,” Larsen says. “In this case, while HHS is accommodating existing state efforts to maintain access to these products in order not to disrupt an existing marketplace established under State law, this policy would not apply to laws enacted subsequent to September 23, 2010 intended to create a new similar marketplace.”
A separate OCIIO guidance notice will require mini-med plans and issuers to send participants a notice in “14 point bold type.”
The notice, which can be printed at the front of materials such as summary plan descriptions, must state the following:
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]
[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].