If you offer a “mini-med” plan and you or your insurer have applied for or received a waiver of the restricted annual limits, you will want to read this Bulletin because the new HHS Supplemental Guidance may require you to take additional actions.
The Centers for Medicare & Medicaid Services issued Supplemental Guidance on June 17, 2011 announcing that it will end the existing Annual Limit Waiver Process as of September 22, 2011. This Waiver program generally allows “mini-med” plans that were in existence prior to September 23, 2010, to apply annually for a waiver from the “restricted annual limits” requirement in the Health Care Reform (HCR) law so they can continue to operate. This new Supplemental Guidance eliminates the annual re-application process and allows applicants to extend an existing waiver until—or apply for a new waiver that will apply until—January 1, 2014, but it also requires that both types of applications be submitted by September 22, 2011 and that Annual Limit Updates be submitted by December 31 in 2012 and 2013.
A plan or policy that has not elected a waiver extension or has not received a waiver approval must come into compliance with the limitations on annual limits on “essential benefits.” The annual limits are $750,000 for plan years beginning on or after September 23, 2010 and ending before September 23, 2011; $1.25 million for plan years beginning on or after September 23, 2011 and ending before September 23, 2012; $2.0 million for plan years beginning on or after September 23, 2012 and ending before January 1, 2014. No annual limits may be applied in plan years beginning after January 1, 2014.
The Health Care Reform (HCR) law generally prohibits group health plans and health insurance issuers of group or individual health insurance from imposing lifetime or annual limits on the dollar value of health benefits, but allows “restricted annual limits” on “essential health benefits” for plan or policy years beginning before 2014. The Interim Final Regulations (IFR) issued June 28, 2010 established an annual limits waiver program that allowed HHS to waive these restricted annual limits for plans if compliance with the IFR would result in a “significant decrease in access to benefits” or a “significant increase in premiums.” The Center for Consumer Information and Insurance Oversight (CCIIO) published prior guidance setting out the process for “mini-med” plans to follow to apply for a waiver of the restricted annual limits. (“Mini-med” is the term applied to plans that offer a very limited annual benefit (often $10,000-$20,000) that is far less than the otherwise-required annual limit.) This Supplemental Guidance is formal notice that CCIIO will end the existing annual limit waiver application process on September 22, 2010 and will replace it with a more limited but less administratively burdensome process.
What Will be Required for Extensions of Existing Waivers and for Applications for New Waivers?
The new process is almost identical for group health plans and health insurance issuers that have previously received a waiver for the current plan year and want to apply for an extension of that waiver, and for plans and issuers that are applying for their first waiver. Differences are noted below. In either case, the Waiver application process is available only to plans or policies that were in existence prior to September 23, 2010.
Both categories of applicants must: 1– Complete the Waiver Extension form or New Waiver Application form. Both are available here. Specific information must be provided, such as contact information, enrollment information, current annual limits, and a signed attestation, which is also available at the above link.
2– Submit the attestation and the Waiver Extension or Application Form by e-mail to HHS.
—a– For Extensions of existing waivers, the e-mail address is AnnualLimitExtension@cms.hhs.gov (use “Waiver Extension” as the subject of the e-mail).
—b– For New Applications, the e-mail address is AnnualLimitWaivers@cms.hhs.gov (use “New WaiverApplication” as the subject of the e-mail).
—c– CCIIO will accept both types of applications from June 24 – September 22, 2011. 3– Re-submit the specific information required on the Waiver Extension form annually by the end of each calendar year. This is called the Annual Limit Update, and it must be submitted by December 31, 2012 and December 31, 2013.
4– Retain all records pertaining to the application, to permit HHS to conduct an audit at its discretion.
5– Distribute an updated Annual Notice to all eligible participants and subscribers. This Annual Notice must be provided as part of the materials that describe the terms of coverage (e.g., in the summary plan description), and must be prominently displayed in clear, conspicuous 14-point bold type on the front of the materials. Page 7 of the Supplemental Guidance includes the required language. If you want to use different notice language to satisfy the Annual Notice requirement, you must obtain written permission from CCIIO.
HHS has discretion to withdraw a new or existing Waiver or Waiver Extension if the plan or issuer fails to comply with any of the above conditions.
Waivers only Apply for Plans that were in Effect before September 23, 2010
The Guidance specifically states that “waivers are not intended to permit new, non-compliant insurance coverage to be offered.” The waivers are “solely for the purpose of maintaining coverage that was offered before September 23, 2010, except in the case of state-mandated policies.” Carriers are prohibited from providing new policies to group health plans or selling new individual policies after September 23, 2010 that have annual limits lower than the allowable restricted annual limits (currently $750,000, increasing to $1.25 million for policy years beginning on or after September 23, 2011). Thus, if an employer did not offer a “mini-med” plan before September 23, 2010, it will not be possible for the employer to implement one now by purchasing coverage from a carrier that offered a “mini-med” policy before September 23, 2010, and has received a Waiver from the restricted annual limits.
Next Steps for Employers
1– If you did not offer a “mini-med” plan before September 23, 2010, but you wanted to implement one soon or in the future, it’s too late. You cannot purchase coverage from a carrier that offered a “mini-med” policy before September 23, 2010, and has received a Waiver from the restricted annual limits.
2– If you did offer a “mini-med” plan before September 23, 2010, and you or your insurance carrier previously applied for a Waiver and you wish to continue it, you or your carrier must submit a Waiver Extension application by September 22, 2011. If you do not, your plan must come into compliance with the Annual Limits (which will be $1.25 million for plan years beginning on or after September 23, 2011 and before September 22, 2012).
3– If you did offer a “mini-med” plan before September 23, 2010, and you or your insurance carrier have not already applied for a waiver, you or your carrier must apply for a waiver by September 22, 2011, or your plan must increase its annual limits to comply with those now required by the HCR law. (The only plans that would still qualify to apply for an initial waiver at this time would be those whose plan year begins after today’s date and before September 23, 2011. This probably would be plans with an August 1 or September 1 plan year.)
4– If you did offer a “mini-med” plan before September 23, 2010, and you or your carrier have received or do receive a waiver, you or your carrier must:
—a– Submit an Annual Limit Update to HHS, by December 31, 2012 and another one by December 31, 2013.
—b– Retain all records pertaining to the waiver application, to permit HHS to conduct an audit at its discretion.
—c– Distribute an updated Annual Notice to all eligible participants and subscribers, using the language in the Supplemental Guidance. This Annual Notice must be prominently displayed in clear, conspicuous 14-point bold type on the front of the SPD or other materials that describe the terms of coverage.
Confirm with your carrier that it is meeting the above requirements.