Filed Under:Agent Broker, Agency Management

Feds Give Flexibility To Limited Benefit Med Plans

NU Online News Service, sept. 15, 3:30 p.m. EDT

WASHINGTON--An insurance agents' group is lauding the decision of federal officials to provide the industry great flexibility when selling limited-benefit medical plans.

The decision was announced last week by the Health and Human Services' Office of Consumer Information and Insurance Oversight (OCIIO).

The decision allows group health plan or health insurance issuers to apply for a waiver from the new federal restrictions on annual major medical plan benefit limits if the plan was offered before Sept. 23, for a plan or policy year beginning between Sept. 23, 2010 and Sept. 23, 2011, said Steve Larsen, head of the OCIIO and former Maryland insurance commissioner.

In a recent insurance standards bulletin, Mr. Larsen said the waiver application should include:

o The annual limits and rates applicable to the plan or policy forms submitted.

o A description of why compliance with the new annual benefits limits would increase the cost or decrease the availability of the affected limited-benefit products.

o An attestation, signed by the plan administrator or chief executive officer of the issuer of the coverage, certifying that the plan was in force before Sept. 23 and certifying the applying annual benefits limit restrictions to the plans would hurt the plans.

Joel Kopperud, a director of government relations for the Council of Insurance Agents and Brokers, said

the bulletin "essentially told us that if we can prove that meeting the new annual limit regulations would result in premium increases or reduced coverage, companies would get a waiver from the requirements."

Mr. Kopperud said that is "exactly what would happen in the limited medical benefit space" if the waiver wasn't allowed.

"In a perfect world, companies wouldn't have to shoulder the burden of demonstrating the impact, but this is a case where we should avoid making perfect the enemy of good," Mr. Kopperud said.

Mr. Kopperud said he believes the policy regarding mini-med plans "is an example of how the administration and the insurance industry can work together to find a solution that serves both interests well."

"I hope we continue to see more collaboration with HHS on other key PPACA regulations moving forward," he added.

In other comments, Brian Robertson, executive vice president of Fringe Benefit Group, Austin, Texas, a company that sells limited-benefit plans, says in a commentary on the Larsen bulletin that health care reform law provisions other than the annual benefits limit provisions also could make writing limited-benefit products difficult or impossible, and that it's not clear how many limited-benefit plan carriers will get relief through the annual benefits maximum waiver program.

Three agencies--the Internal Revenue Service, an arm of the U.S. Treasury Department; the Employee Benefits Security Administration, an arm of the U.S. Labor Department; and the OCIIO--teamed up in June to release a 196-page batch of interim final rules and guidance.

The rules and guidance implemented provisions in the Affordable Care Act--the legislative package that includes the Patient Protection and Affordable Care Act (PPACA)--that Congress included in an effort to help patients.

The regulatory materials deal with topics such as major medical benefits maximums, rescissions of

major medical policies and provisions for limited-benefit medical plans, which are also known as "mini-med plans."

Insurers developed the plans to provide small amounts of low-cost coverage for temporary workers, part-time workers who otherwise might be unable to afford, or even qualify to buy, conventional major medical coverage.

Critics of the mini-med products argue that the owners often are unsophisticated consumers who end up thinking they have far more coverage than they really have.

Supporters of the products contend that they provide enough coverage to meet the needs of relatively healthy insureds and may help insureds with more serious problems enter the system as insured patients.

Under the provisions of the new PPACA regulations, conventional major medical plans will have to offer annual benefits maximums of at least $750,000 for plan or policy years beginning on or after Sept. 23, 2010 and before Sept. 23, 2011.

The minimum annual limits for conventional plans will increase to $1.25 million Sept. 23, 2011 and to $2 million Sept. 23, 2012.

Federal agencies reported in June that they would make special allowances for mini-med plans, to keep the new PPACA restrictions on benefits maximums and other PPACA provisions from making mini-med plans impossible to sell.

The agencies said the OCIIO would set up a waiver program to help mini-med plan providers cope with restrictions on annual benefits maximums.

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