Guidance Issued For Mini-Med Plans

Two new sets of guidance issued by the Department of Health and Human Services (HHS) on December 9 require that health insurers offering “mini-med” plans must notify consumers in plain language that their plan offers extremely limited benefits, and restrict the sale of new mini-med plans except under very limited circumstances. Mini-med plan insurers also must direct consumers to http://www.HealthCare.gov where they can get more information about other coverage options.

The Patient Protection and Affordable Care Act (ACA) bans annual dollar limits for coverage of essential benefits such as hospital, physician, and pharmacy, effective with plan years beginning in 2014. Until then, annual limits are phased out as follows: For plan years starting between Sept. 23, 2010, and Sept. 22, 2011, the limits may not be less than $750,000; for plan years starting between Sept. 23, 2011, and Sept. 22, 2012, the limits may not be less than $1.25 million; and for plan years starting between Sept. 23, 2012, and Jan. 1, 2014, no less than $2 million.

Consequently, the ACA provisions will end limited-benefit health insurance plans, sometimes called “mini-med” plans, in 2014 and make available affordable coverage options through health insurance exchanges. “Unfortunately, today, mini-med plans are often the only type of private insurance available to some workers,” the HHS said in a press release announcing the new rule. “In order to protect coverage for these workers, HHS has issued temporary waivers from rules restricting the level of annual limits to some group health plans and health insurance issuers. Waivers only last for one year and are only available if the plan certifies that a waiver is necessary to prevent either a large increase in premiums or a significant decrease in access to coverage.”

New Sales Limited

The first December 9 guidance clarifies that the waivers apply only to mini-med plans in effect before Sept. 23, 2010. Effective on or after Sept. 23, 2010, insurers granted waivers for mini-med plans may not issue new mini-med plans for group or individuals, except under the following two circumstances:

1. in the case of states with laws in effect before Sept. 23, 2010, that mandate the availability of low annual limits policies and that apply for a waiver on behalf of existing issuers, but only for policies through Sept. 23, 2011; and


2. to allow group health plans in effect before Sept. 23, 2010, with waivers to change to a different issuer that also has received a waiver, as permitted for a grandfathered health plan. This change is permitted as long as the existing annual limits are not lowered and any coverage changes are within the allowed parameters. If the group health plan obtained from the issuer before Sept. 23, 2010, is no longer available, the plan sponsor may obtain a replacement policy with a lower annual limit only if other comparable coverage with the same level of annual limits as the prior policy is not available. Note that if the replacement policy has a lower annual limit than was in effect before Sept. 23, 2010, the plan loses its grandfathered status.

Any health insurance issuer of new waivered coverage must obtain from the plan sponsor a statement that the criteria outlined above are satisfied, and the statement must be accompanied by a copy of the prior policy outlining the terms of the prior coverage. Issuers must retain this information in accordance with the data retention requirements of the Sept. 3, 2010, and Nov. 5, 2010, guidance documents.

Notice Requirements

Under the second set of guidance, mini-med plans that have received waivers also must inform consumers that the health care coverage offered through these plans have lower annual dollar limits than the limits required under the health reform law. The notice to consumers must specify the dollar amount of the annual limit along with a description of the plan benefits to which the limit applies, and that the waiver was granted for only one year. The guidance provides model language that group health plans and issuers will be required to use to satisfy the transparency requirements established in the Nov. 5, 2010, supplemental guidance.

For plans or issuers that have already been approved, or that will receive approvals, for a waiver for plan or policy years that begin before Feb. 1, 2011, the notice must be provided to current and eligible participants and subscribers within 60 days from December 9, the date the guidance was issued. For applicants for waivers covering plan or policy years that begin on or after Feb. 1, 2011, the notice must be provided to eligible participants and subscribers as part of any informational or educational materials, and also in any plan or policy documents sent to enrollees describing coverage (e.g., summary plan descriptions).

For additional information on these provisions, e-mail the OCIIO at OCIIOOversight@hhs.gov (use “supplemental guidance” in the subject line).

For a comprehensive analysis of the ACA, and additional information on health reform and other developments in employee benefits, just click here.