Now that heath reform remains intact, it's official: compliance waivers on expense-incurred medical plans are set to expire on Dec. 31, 2013 - which will result in millions of uninsured hourly and part-time employees looking for new avenues of health care coverage.

According to federal employment statistics, there are 35 million hourly and part-time employees in the U.S. Of those employees, Fringe Benefit Group's Brian Robertson estimates about one million are enrolled in expense-incurred medical plans.

Agents, brokers and consultants must prepare their clients now for the flood of expense-incurred plan participants who will soon be looking for a new health coverage plan, says Robertson, executive vice president of the Austin, Texas-based limited medical specialists.


Future forecast

In order to be compliant with the Patient Protection and Affordable Care Act's requirement that annual dollar limits on benefits be eliminated by 2014, The American Workers' Jon Duczak expects the law will also eliminate expense-incurred plans' affordability - causing them to vanish from the marketplace. "Complying would mean a tremendous rate increase," says Duczak, vice president of the South Barrington, Ill.-based limited medical MGA.

Both Robertson and Duczak say brokers working with the expense-incurred product need to look at how they're going to serve their clientele over the next 18 months as waivers expire, and help those clients decide if they're going to continue to provide a part-time or a voluntary employee medical program at all. "If they're going to continue [to offer benefits] they need to ... be considering the indemnity marketplace, or option B, they no longer want to continue to offer mini-meds," says Duczak.

Tracy Watts, partner and south market leader for client solutions with Mercer's Washington office, predicts most employees who work less than 30 hours a week will be sent to the state exchanges for their benefits.


The other option

While expense-incurred may be going away for good, Duczak believes that fixed indemnity plans will be around after 2014 because the plans have always been intended to supplement a health program, and they comply with PPACA's bronze plan.

There's still plenty brokers and consultants can bring to the table when it comes to offering a fixed indemnity mini-med versus sending those employees to exchanges. Robertson points out that for part-time employee plans it is especially important that the administrative interface with an employer offering such benefits is done really well. "There are unique challenges because of the amount of turnover," he says. " ... Things like enrollment and premium collection have to be seamless."

For brokers talking with clients about staying in the indemnity market, Duczak insists, "they have to remember if they're moving their mini-med group or looking at the indemnity market there are likely only a handful of vendors that are equipped to service all types of business, whether it be small, mid or very large business," he says. "If all of these accounts are out in the market mid-2013 those vendors, no matter how good they are, will run into capacity issues in terms of being able to intake that volume of business."

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