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CCH® BENEFITS — 02/08/11

More Than 2.2 Million Employees In 733 Health Plans Gain Waivers From Annual Limits

from Spencer’s Benefits Reports: As of Jan. 26, 2011, the Department of Health and Human Services (HHS) has provided annual limit waivers to 733 organizations covering almost 2.3 million employees under Sec. 2711 of the Public Health Service Act (PHSA), added by the Patient Protection and Affordable Care Act (ACA). In December, slightly more than 200 plans had received waivers.

According to HHS, limited benefit plans, or “mini-med” plans are often the only type of insurance offered to some workers. In 2014, the ACA will end mini-med plans when Americans will have better access to affordable, comprehensive health insurance plans that cannot use high deductibles or annual benefits limits. In the meantime, the law requires insurers to phase out the use of annual dollar limits on benefits. In 2011, most plans can impose an annual limit of no less than $750,000, increasing to $1.25 million in 2012, $2 million in 2013, and unlimited coverage in 2014.

Mini-med plans have lower limits than allowed under the ACA. HHS notes that “while mini-med plans do not provide security in the event of serious illness or accident, they are unfortunately the only option that some employers offer. In order to protect coverage for these workers, the ACA allows these plans to apply for temporary waivers from rules restricting the size of annual limits to some group health plans and health insurance issuers.”

According to the HHS, “Applications for waivers from annual limit requirements are reviewed on a case by case basis on a series of factors including whether or not a premium increase is large or if a significant number of enrollees would lose access to their current plan because the coverage would not be offered in the absence of a waiver.”

The three largest organizations with waivers were the United Federation of Teachers Welfare Fund, with 351,000 employees; Cigna, with 265,000 employees; Aetna, with 209,000 employees; and BCS Insurance, a Blue Cross Plan that covers McDonald’s workers, with 115,000 employees. All of these companies attained waivers in September 2010. The smallest organization granted a waiver (in late December 2010) is the Sieben Polk Law Firm, with three employees.

Increase Since December

More than 500 waivers were granted in December. While the number of approved waivers increased by more than 200%, the total number of enrollees in plans receiving waivers has increased by only 48% since the previous posting.

HHS provided this additional information regarding the waivers:

• The vast majority of all waivers–712 plans, representing 97% of the waivers–were granted to health plans that are employment-related.
• Self-insured employer-based health plans received 359 of the waivers, or more than half, of the waivers.
• Most of the other health plans receiving waivers are multi-employer, collectively-bargained health funds. A total of 182 collectively-bargained plans have received waivers.
• HHS has approved 171 applications for waivers for Health Reimbursement Arrangements (HRAs).
• Sixteen waivers were granted to health insurers, which can apply for a waiver for multiple mini-med products sold to employers or individuals.
• Four waivers have gone to state governments. States may apply for a waiver of the restricted annual limits on behalf of issuers of state-mandated policies if state law required the policies to be offered by the issuers prior to Sept. 23, 2010. According to HHS, the four states received waivers for 44 organizations covering 93,470 employees.

For more information, visit http://www.hhs.gov/ociio/regulations/approved_applications_for_waiver.html

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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