As previously noted in this column, the Patient Protection and Affordable Care Act (PPACA) generally provides that group health plans and health insurance issuers offering coverage to individuals or group health plans may not impose an annual or lifetime dollar limit on essential benefits, as defined in PPACA, effective for plan years beginning on or after September 23, 2010. The statute allows the Secretary to permit “restricted annual limits” prior to 2014 to ensure that “access to needed services is made available with a minimal impact on premiums.”
An Interim Final Regulation (IFR) on the annual and lifetime limit restrictions and other PPACA provisions provides generally that for plan years beginning before 2014, a group health plan is permitted to have a restricted annual limit on essential benefits, as long as the annual limit is at least:
- (1) $750,000 for plan years beginning on or after September 23, 2010 but before September 23, 2011;
- (2) $1.25 million for plan years beginning on or after September 23, 2011 but before September 23, 2012; and
- (3) $2 million for plan years beginning on or after September 23, 2012 but before January 1, 2014.
On September 3, the Department of Health and Human Services (HHS) released guidance on the restricted annual limit waiver program in the form of a 3-page Insurance Standards Bulletin (“Bulletin”). In general, waiver applications must show that applying the restricted annual limit will result in a significant decrease in access to benefits for those currently covered by the plans or policies, or a significant increase in premiums paid by those covered by such plans or policies. A column in September discussed the initial program guidance.
But as for the guidance issued on November 5, 2010, below we briefly summarize key points addressed in the Supplemental Bulletin.
Disclosure requirements for plans receiving a waiver approval. As a condition of the waiver, the Supplemental Bulletin requires that a group health plan provide a notice to participants informing them that the plan does not meet the restricted annual limits for essential benefits provided in the IFR because it received an HHS waiver. The notice must be in 14-point bold type and include the dollar amount of the annual limit and a description of the benefits to which it applies and a statement that the waiver applies for only one year. HHS will issue a model notice in the near future.
Key factors considered in analyzing waiver applications. The Supplemental Bulletin describes key factors that will be considered in determining whether compliance with the restricted annual limit would result in a "significant decrease in access to benefits" or a "significant increase in premiums." It provides examples of key factors that may be considered, including:
The application's explanation as to how compliance would result in a decrease in access to benefits;
- The plan's current annual limits;
- The change in premiums in percentage terms;
- The change in premiums in dollar terms;
- The number and type of benefits affected by the annual limit; and
- The number of enrollees in the plan.
Relationship to medical loss ratio (MLR) provisions. The Supplemental Bulletin provides that HHS intends to issue MLR regulations in the near future that will include a special methodology for mini-med plans. HHS issued MLR regulations on November 22, 2010 containing substantial relief for mini-med plans for 2010.
Record retention and audit requirements. The Supplemental Bulletin notes that waiver applicants are subject to potential audits by HHS of the data submitted by applicants.
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You can find a handy list of Key Provisions of the Patient Protection and Affordable Care Act and their effective dates at http://www.groom.com/HCR-Chart.html
Christy Tinnes is a Principal in the Health & Welfare Group of Groom Law Group in Washington, D.C. She is involved in all aspects of health and welfare plans, including ERISA, HIPAA portability, HIPAA privacy, COBRA, and Medicare. She represents employers designing health plans as well as insurers designing new products. Most recently, she has been extensively involved in the insurance market reform and employer mandate provisions of the health-care reform legislation.
Brigen Winters is a Principal at Groom Law Group, Chartered, where he co-chairs the firm's Policy and Legislation group. He counsels plan sponsors, insurers, and other financial institutions regarding health and welfare, executive compensation, and tax-qualified arrangements, and advises clients on legislative and regulatory matters, with a particular focus on the recently enacted health-reform legislation.
PLEASE NOTE: This feature is intended to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.