Health Care Reform - Limited Medical in 2011 and Beyond

This is certainly an interesting time to be involved with group health care. It’s been almost a year since PPACA was passed, and there are as many questions surrounding it today as there are answers. Everyone – employees, employers, elected officials, insurance carriers, agents, brokers – is struggling to determine how this legislation will affect them. Most importantly, employers want to know how to manage their employee benefits programs.

To date, the Department of Health and Human Services has provided guidance on how PPACA applies to the limited medical industry. Specifically, they have addressed annual limit waivers and the interpretation of limited medical minimum loss ratios, which has bought another year of survival for most of the existing limited medical or “mini-med” plans that are subject to the act.

But what will happen in 2011? That’s an answer that will have to play out in time.

What we do know?

Because of their fixed indemnity benefit structure, some limited medical plans do not meet the definition of a “group health plan” under PPACA. As a result, these fixed indemnity limited medical products are exempt from the new rules that affect most health plans. These plans can offer a viable option for new business, as well as continuing to serve the thousands of working Americans they already cover. No significant changes at renewal time are expected prior to 2014.

Signs you need stability for your limited medical client

1. You have a client on a co-insurance-based limited medical plan that is subject to PPACA. Whether or not you received a waiver for any part of your plan for 2011, the product faces many uncertainties, especially with the laser-sharp focus the government has placed on these plans. At the very least, you should have a backup plan in place; if not, implement that backup plan as soon as possible.
2. Your group is facing a rate increase. You can achieve rate stability in today’s marketplace. Plans that are subject to PPACA will not be adding new business, and are facing uncertainty when it comes to managing costs associated with meeting the act’s requirements. If your plan is facing this kind of change, it is time to evaluate other options.
3. HHS has a long way to go. More regulations could affect the plans that are subject to PPACA. Why worry about uncertainty when there are better, less controversial options available today?
4. Your client desires to use internal resources on something other than limited medical. A company’s limited medical plan is often of secondary concern for an overtaxed HR department. Put a plan in place that isn’t subject to legislative wrangling, allowing the HR department to focus on other initiatives.
5. You wish to maintain your current revenue level. Let’s face it: The MLR wording is murky. If carriers have to cut expenses, guess what is most likely to get chopped first? Agent commissions.

Brian Robertson is executive vice president of Fringe Benefit Group, which provides and administers limited medical plans. He can be reached at 800-551-3424 or [email protected].

For more exclusive benefits coverage, visit ASJ’s Employee Benefits Resource Center.