The waiver only applies for one year, so plans are beginning to consider whether to request waivers for 2012. Earlier this month, HHS issued additional guidance allowing plans to extend their waivers. We answer recently received waiver questions below.
What is the Annual Waiver and What Provisions Are Waived?
PPACA generally prohibits a group health plan from imposing lifetime or annual dollar limits on essential health benefits, but allows restricted annual limits until 2014. For plan years beginning on or after September 21, 2010 (the 2011 plan year), a plan’s annual limit on essential health benefits must be at least $750,000. For 2012, a plan’s annual limit must be $1.25 million, and for 2013, $2 million. Beginning in 2014, a group health plan may no longer impose an annual limit on essential health benefits.
However, PPACA provides that a plan may request a “waiver” from the annual limit rules if compliance would result in a significant decrease in access to benefits or a significant increase to premiums. The Secretary of HHS established an application process, which granted waivers for a one-year period. The waiver only exempts a plan from the annual limit requirement, not the other provisions of PPACA. Typically smaller plans that had more limited benefits, such as so-called “mini-med” plans, have been applying for the waiver.
How Can a Plan Extends its Waiver?
On June 17, 2011, HHS issued guidance allowing plans to extend their current waivers through January 1, 2014, when annual limits on essential health benefits no longer are permitted. Under the new guidance, a group health plan that has received a waiver of the restricted annual limit of $750,000 for the 2011 plan year that wishes to extend its waiver must complete the Waiver Extension form available at: http://cciio.cms.gov/programs/marketreforms/annuallimit/index.html.
As part of its extension request, the plan must provide HHS with the following information:
1. Updated contact information, including the name and contact information of the applicant, as well as the name and contact information of the person who prepared the annual update;
2. Enrollment information for the plan or policy at the time the annual update is sent;
3. The plan's current annual limit; and
4. A signed attestation certifying that:
a. The plan or policy was in existence prior to September 23, 2010;
b. Compliance with the otherwise applicable restricted annual limit would result in a "significant decrease in access to benefits" or a "significant increase in premiums;" and
c. The plan will comply with the requirement to provide annual notice to plan participants as to the plan's waiver, and its implications for plan participants.
HHS indicated that it will begin accepting elections for Waiver Extensions on June 24, 2011. The deadline for receipt of Waiver Extension forms is September 22, 2011. Plans that do not elect a Waiver Extension by September 22, 2011 will be required to come into compliance with PPACA's annual limit rules.
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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.