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.”