Limited Medical Exec Marvels at Numbers
Fringe Benefit Group has been selling limited benefit medical plans designed for hourly and part-time workers who would not normally get employer-sponsored major medical coverage.
The PPACA Benefits Limit Provisions
Fringe Benefit Group and other limited medical plan sellers have been wrestling with the benefits limit provisions in the Patient Protection and Affordable Care Act of 2010 (PPACA).
Congress included the provisions because of concerns that even relatively high major medical benefits limits – such as an annual limit of $1 million or a lifetime limit of $5 million – have been causing enormous hardship for families that have struggled to pay for major medical coverage and then have faced catastrophic health problems, such as hemophilia, or the need for multiple organ transplants.
PPACA already has banned non-grandfathered health plans from imposing life time benefits caps.
Starting with policy years beginning between Sept. 23, 2010, and Sept. 22, 2011, most non-grandfathered health plans are supposed to have annual benefit caps of at least $750,000. The minimum annual benefits levels are set to increase twice before 2014, and all annual benefits limits are scheduled to disappear in 2014, when PPACA is supposed to make new types of high-quality, heavily subsidized health coverage available to low-income and moderate-income workers on a guaranteed-issue basis.
The PPACA benefits limit provisions exclude some limited benefit plans, Robertson says.
The plans excluded are structured as supplemental benefit plans that pay a “fixed indemnity benefit,” or pre-set amount of cash, when an insured meets specified requirement, such as entering a hospital or losing a toe.
The PPACA benefits limit provisions do apply to many other limited benefit plans that are structured as “mini med plans,” or plans that resemble traditional major medical plans and require enrollees to pay co-payments, coinsurance amounts or both while getting major medical-style benefits up to a relatively low limit.
Some mini med plans have had annual benefits limits as low as $2,500.
The U.S. Department of Health and Human Services (HHS) created an annual benefit limit rule waiver program for mini med plans sponsors and insurers that sets different, lower minimum annual benefits levels for mini med plans.
HHS created the waiver program in an effort to keep the limit rules from stranding mini med plan enrollees between now and 2014, HHS officials say.
Republicans in Congress have accused HHS of creating the waiver program to reward Obama administration supporters.
The Center for Consumer Information & Insurance Oversight (CCIIO) has announced that it phasing out the waiver program and will stop taking new waiver applications Sept. 22.
HHS officials have emphasized that it has granted only about 1,000 waivers, and that those waivers affect just 2.9 million people, or only about 2% of the 160 million U.S. residents who have private, employer-sponsored health coverage.
The volume of waivers granted to companies using coinsurance-based mini med plans has been surprising, Robertson says.
“Some of original estimates of the number of people in the U.S. covered under limited medical plans were closer to 1.7 million people, yet we have waivers for 2.9 million?” Robertson asks.
The waiver numbers do not include any of the people with fixed indemnity style limited medical plans, because those plans have not had to comply with the annual benefits limit rules, Robertson says.
“I do not think we, in the benefits community, or the federal government realized just how many people are covered under limited medical plans,” Robertson says.
If nothing else, at least PPACA has begun to help people with an interest in the subject understand just how many people have limited medical coverage because of the holes in the current system, Robertson says.
“Halting the waivers at this point is like shutting the barn door after all the animals have escaped,” Robertson says. “Who cares? The waivers that have been granted are eligible for renewal on an annual basis and we have seen nothing to suggest that there will be any chance of non-renewal, although we suspect that there will be significant rate increases for these plans.”
The number of people in the plans affected by the waivers is about 50% higher than expected, and that means the number of people who will be eligible for and in need of subsidized coverage in 2014 may be about 50% higher than expected, Robertson says.
“The financial impact?” Robertson asks. “Ouch.”