HHS Addresses Waivers For Health Plan Annual Limits Requirements Under Reform

At the beginning of September, the Department of Health and Human Services' (HHS) Office of Consumer Information and Insurance Oversight (OCIIO) issued guidance on the process for obtaining waivers of health plans' annual limits requirements under Public Health Service Act (PHSA) Sec. 2711, added by the Patient Protection and Affordable Care Act. The guidance is in Memorandum, OCIIO 2010-1.

PHSA Sec. 2711 requires the HHS to impose restrictions on the imposition of annual limits on the dollar value of essential health benefits for any participant or beneficiary in a new or existing group health plan or a new policy in the individual market for plan or policy years beginning on or after Sept. 23, 2010, and prior to Jan. 1, 2014. Specifically, HHS has the authority to determine what constitutes a "restricted annual limit" that can still be imposed under such plans or policies prior to Jan. 1, 2014.

Interim final regulations published on June 28 established guidance for these restricted annual limits. The regulations also provided that the HHS may waive these restricted annual limits if compliance with the interim final regulations would result in a significant decrease in access to benefits or a significant increase in premiums.

Plans affected. Certain group health plans and health insurance coverage, generally known as "limited benefit" plans or "mini med" plans, often have annual limits well below the restricted annual limits set out in the interim final regulations. These group plans and health insurance coverage often offer lower-cost coverage to part-time workers, seasonal workers, and volunteers who otherwise may not be able to afford coverage at all.

Waiver process. The OCIIO memorandum indicates that a group health plan or health insurer may apply for a waiver from the restricted annual limits set forth in the interim final regulations if the plan or the coverage offered by the insurer was offered prior to Sept. 23, 2010, for the plan or policy year beginning between Sept. 23, 2010, and Sept. 23, 2011, by submitting an application not less than 30 days before the beginning of that plan or policy year, or in the case of a plan or policy year that begins before Nov. 2, 2010, not less than ten days before the beginning of that plan or policy year. The application must include the following information:

1. The terms of the plan or policy form(s) for which a waiver is sought;
2. The number of individuals covered by the plan or policy form(s) submitted;
3. The annual limit(s) and rates applicable to the plan or policy form(s) submitted;
4. A brief description of why compliance with the interim final regulations would result in a significant decrease in access to benefits for, or significant increase in premiums paid by, those currently covered by, those plans or policies, along with any supporting documentation; and
5. An attestation, signed by the plan administrator or chief executive officer of the issuer of the coverage, certifying that: (1) the plan was in force prior to Sept. 23, 2010, and (2) the application of restricted annual limits to such plans or policies would result in a significant decrease in access to benefits for, or a significant increase in premiums paid by, those currently covered by those plans or policies.

The memorandum indicates that the HHS will process complete waiver applications within 30 days of receipt, except that complete applications submitted for plan or policy years beginning before Nov. 2, 2010 will be processed no later than five days in advance of that plan or policy year.

Waiver approval. A waiver approval granted under this process applies only for the plan or policy year beginning between Sept. 23, 2010, and Sept. 23, 2011. A group health plan or health insurer must reapply for any subsequent plan or policy year prior to Jan. 1, 2014, when the waiver expires.

Where to send application. Plans may apply for the waiver by sending the required items within the specified time frames to HHS, Office of Consumer Information and Insurance Oversight, Office of Oversight, attention James Mayhew, Room 737-F-04, 200 Independence Ave. SW, Washington, DC 20201 or by emailing the items to healthinsurance@hhs.gov (use "waiver" as the subject of the email).

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