6/17 Guidance Says Temporary Relief Offered Through 2014 Unavailable For Plans Not Applying By 9/22/11

Health plans and insurers wishing to qualify for a temporary waiver of annual limit restrictions enacted under the Affordable Care Act after September 22, 2011 must act quickly and should expect to face tougher qualification requirements.  Plans and insurers not applying by a newly set September 22, 2011 deadline will be permanently disqualified from eligibility to request the relief for post-September 22, 2011 plan years according to guidance issued Friday, July 17, 2011.

Plans Must Apply Before 9/22/11 & Meet Tightened Requirements To Preserve Possibility Of Temporary Relief Qualification For Post 9/22/11 Plan Years 

On Friday, June 17, 2011, the Centers for Medicare and Medicaid Services (CMS) announced that CMS will not accept or consider any new applications or requests for extensions of temporary waivers of the Affordable Care Act annual limitation requirements.  

Additionally, CMS also updated the requirements that plans and insurers applying for a new or extension of an existing annual limit waiver  before September 22, 2011 through 2013.  Under the new guidance, any plans receiving these waivers also will have to meet tighter requirements to qualify for the requested annual limit waiver for post-September 22, 2011 plan years.

The Affordable Care Act will ban annual limits for non-grandfathered health plans beginning in 2014.  Until then, the Affordable Care Act provides for the phased out of annual limits.  The phase out of the annual limits is intended to preserve access to needed benefits and the affordability of coverage until the reforms scheduled to take effect in 2014 are in place. 

Currently, most plans cannot impose an annual limit that is lower than $750,000.  Beginning in September, 2011, the allowable annual limit under the Affordable Care Act will increase to $1.25 million and to $2 million for plan years beginning in September 2012. 

Temporary Waiver Program Provides Relief For Some Qualifying Plans

In response to concerns that compliance with the phased in annual limit restrictions would result in significant cost increases or coverage terminations for many plans,  CMS last year issued guidance that granted temporary waivers from the phased in annual limits for qualifying limited benefit,, “mini-med” or certain other qualifying plans that submitted timely applications demonstrating that compliance with the phaseout limits would result in a significant decrease in access to benefits or a significant increase in premiums and met other qualification requirements. (For a list of applications previously approved or denied by city and state, see cciio.cms.gov/resources/files/approved_applications_for_waiver.html.)

CMS Most Likely To Approve Waiver Requests For Plans With Lower Annual Limits But Other Plans Also Can Apply

Like the waiver program guidance for 2010, the June 17, 2011 guidance technically gives all plans and issuers with restricted annual limits below $2 million the opportunity to apply for a temporary waiver before September 22, 2011.  However, not all plans will necessarily qualify for the requested relief.   

Under the temporary waiver program, CMS authority to decide whether to approve or deny an annual limit waiver request made by a plan that otherwise meets all requirements. CMS has indicated that it is most likely to approve waivers for plans with low annual limits (e.g., $10,000), as CMS sees these plans as most likely to need waivers to prevent a significant increase in premiums or decrease in access to coverage to comply with the current limit of $750,000.  In contrast, CMS views plans with higher annual limits as less needful of a temporarywaiver because complying with the new rules is unlikely to lead to a significant increase in premiums or decrease in access to care. CMS says that its actuarial analysis indicates that most plans that currently have annual limits above $750,000 and below $2 million can meet the increased 2011 annual limit of $1.25 million with minimal premium increases (less than one percent).  Similarly, CMS predicts that increasing annual limits from $1.25 million to $2 million in 2012 will have a “small impact” on premiums. Consequently, CMS is less likely to approve waiver requests for plans that already have higher limits in effect.

CMS Also Tightening Other Requirements For Waiver Relief Qualification

In addition to applying for a waiver before September 22, 2011 and showing the requisite impact on plan costs or coverage, the July 17 guidance also will require that plans seeking a temporary waiver of the annual limit after September 22, 2011 meet other more stringent conditions.  Among other things, plans with waivers will be required:

• To tell consumers that their health care coverage is subject to an annual dollar limit lower than what is allowed under the law;
• Include the dollar amount of the annual limit along with a description of the plan benefits to which the limit applies;
• Show how the annual limit would affect a consumer who was hospitalized to help people understand how far their coverage will reach if they become seriously ill; and
• Must attest annually to their compliance with the consumer disclosure requirement.

Plans & Sponsors Should Act Quickly To Keep Option of Qualification For Temporary Relief Option

Plans and insurers that wish to preserve the possibility of qualifying for temporary relief from the otherwise applicable Affordable Care Act limitations on annual waivers for post-September 22, 2011 plan years should act quickly to prepare and submit their application for relief.

For Help or More Information

If you have questions or need help understanding or responding to the Regulations, with other health benefit design, administration or operations concerns, or with other employee benefits, compensation, labor or employment or other workforce management concerns, please contact the author of this update, Board Certified Labor and Employment attorney and management consultant Cynthia Marcotte Stamer hereor at (469)767-8872.

Ms. Stamer is scheduled to conduct training on these and other health benefit requirements for a number of organizations is upcoming months.  For information about these and other training opportunities or for other resources and information, see here or contact Ms. Stamer directly.

Past Chair of the American Bar Association (ABA) Health Law Section Managed Care & Insurance Interest Group, Chair of the ABA RPTE Employee Benefit and Other Compensation Committee, and a council member of the ABA Joint Committee on Employee Benefits, Ms. Stamer is nationally recognized for her more than 23 years pragmatic and innovative health program work.

Board certified in labor and employment law by the Texas Board of Legal Specialization with extensive leading edge health plan experience, Ms. Stamer has worked continuously throughout her career helping health plan sponsors, fiduciaries, administrators, insurers and others design, administer and defend health and other employee benefit and insurance programs domestically and internationally. She is widely recognized for her experience helping design and implement legally compliant self-insured and insured health reimbursement, mini-med, high-deductible health plans, limited benefit plans, 24-hour and occupational medicine, ex-pat and medical tourism, deductible reimbursement and other creative health benefit programs to solve a wide range of financial and other challenges while coping with changing regulatory and market realities. Her work includes both working with clients to design, document, implement and administer these and other arrangements, as well as the development of wellness and disease management, claims administration and appeals, eligibility, and other administrative services, processes and technologies.  She also works with plan fiduciaries, plan sponsors, insurers, administrators, brokers and advisors, bankruptcy trustees, creditors, debtors, service providers and their officers and directors about the prevention, investigation, mitigation and resolutions of civil and criminal liability arising from suspected or known benefit administration claims, breaches of fiduciary duty, privacy and data security breach, vendor disputes and other disputes arising in relation to employee benefit and insurance arrangements.  As a continuing part of this representation, Ms. Stamer regularly represents and defends plan sponsors, fiduciaries, third party administrators and other service providers and management officials in dealings with the Department of Labor, Department of Justice, Department of Health & Human Services, Department of Defense, Securities and Exchange Commission, state insurance regulators, state attorneys general and other federal and state regulators and prosecutors and private plaintiffs in connection with investigations, prosecutions, audits and other actions arising from employee benefit, insurance and related arrangements and products.

Recognized in the International Who’s Who of Professionals and bearing the Martindale Hubble Premier AV-Rating, Ms. Stamer also is a highly regarded author and speaker, who regularly conducts management and other training on a wide range of labor and employment, employee benefit, human resources, internal controls and other related risk management matters.  Her writings frequently are published by the American Bar Association (ABA), Aspen Publishers, Bureau of National Affairs, the American Health Lawyers Association, SHRM, World At Work, Government Institutes, Inc., Atlantic Information Services, Employee Benefit News, and many others. For a listing of some of these publications and programs, see here. Her insights on human resources risk management matters also have been quoted in The Wall Street Journal, various publications of The Bureau of National Affairs and Aspen Publishing, the Dallas Morning News, Spencer Publications, Health Leaders, Business Insurance, the Dallas and Houston Business Journals and a host of other publications. In addition to her many ABA leadership involvements, she also serves in leadership positions in numerous human resources, corporate compliance, and other professional and civic organizations. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, World At Work, the ICEBS, SHRM and many other national and local publications. For additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

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©2011 Cynthia Marcotte Stamer.  Non-exclusive right to republish granted to Solutions Law Press.  All other rights reserved.