Limited medical plans ride the waiver

The growing number of limited medical plans that are receiving waivers from the Department of Health and Human Services for 2011 — a number that nearly quadrupled in the last couple of months, rising from 30 in September to 117 by Nov. 1 — now face some additional reporting requirements.

HHS guidance calls for those plans with a one-year pass from complying with the Patient Protection and Affordable Care Act’s mandated minimum annual dollar limit of $750,000 in 2011 (rising to $2 million by 2013) to provide participants with written notification stating the annual limit requirements and explaining that the plan does not meet those requirements, but that it qualified for a one-year waiver.

CIGNA Voluntary received a waiver for its entire book of business — about 1,700 employers and 250,000 customers — in the first round of approvals. "The response by the Secretary [of Health and Human Services] to grant the waivers was really in recognition of the fact that we need to make sure that these people don't get shoved out of the insurance pool and into the ranks of the uninsured until we have the exchanges and the subsidies built in 2014," says Mark Bailey, senior vice president, CIGNA Voluntary. "So it really was recognition that there was probably a timing problem between when the limits should kick in and when other options for these people are going to be available."

Before CIGNA Voluntary received the waiver for its expense incurred plans, Bailey was hearing a lot of concern from brokers. After the waiver was announced, "we were getting a lot of phone calls, e-mails, shout-outs saying, 'You got that? It looks like we can continue to offer it to our clients,'" he says. "I think getting that waiver went a long way to making them feel better about things."

Still, Symetra Financial is hearing from employers who don't want to worry about the annual reapplication process for the waiver and would rather switch to a fixed indemnity plan. Such plans are exempt from the waiver process because they qualify as supplemental coverage. "The employer is worried about, 'What is the process over the next three years? This removes the questions that I have to deal with so I can focus on 2014 and how to put myself in a good position for that,'" says David Fry, vice president of select benefits and group senior actuary.

For more on the future of limited medical plans, including how leading carriers that provide both fixed indemnity and expense incurred products intend to stay in the market long-term, click here to read EBA’s November feature article.