The Affordable Care Act will eliminate one type of mini medical plan, while making minor changes to another, experts say. Even so, there is an onus to act now.
Under the act, expense-incurred plans will cease to exist, as they fail to meet health care reform's essential health benefits requirement, says P. Todd Dorton, area president, central services at Gallagher Benefit Services Inc., in Waco, Texas. Since the ACA removed annual limits, these plans would become very similar to major medical plans.
"That would require massive rate increases and push them out of the market," says Josh Castiglione, VP of operations at Hoffman Estates, Ill.-based The American Worker, a provider of limited medical plans. "As of 1/1/14, at least as the legislation sits right now, those plans are gone."
However, the fixed indemnity plans will remain in place, as they are exempt from the ACA.
"[They] are defined by [the ACA] as accepted. ... And as accepted, they are allowed to continue and exist outside the law," Castiglione says. "They don't have to comply with certain aspects of the law, such as the annual limit ... portions that would push these products out of the price range of folks normally purchasing them."
They will have to undergo some minor filing changes due to new U.S. Department of Health and Human Services regulations, just a "basic modification of the language," Castiglione explains.
But more importantly, he says, these plans do not fall under federal government regulation, as each policy is filed in the individual state. Dorton says moving forward, users of expense-incurred mini-meds will have to find alternatives.
Employers should talk with their broker or consultant to look at modifying their current offerings to conform with the ACA requirements, he explains. The stakes are that much higher on a broker now, Corlette adds.
"If somebody has a [mini-med plan] and treated it as insurance coverage, that person would most likely face a tax penalty because what they have is not true insurance coverage. In that sense, the consumer is the one at risk."
The plans remaining are expected to become more popular as more workers move to part-time and their employer wants to continue to provide coverage, says Brian Robertson, EVP at Fringe Benefit Group in Austin, Texas.
"It's all about catering benefits programs to those part-time employees," he says. "They can purchase them. They will not be compliant with ACA, but will be an addition," and employees like being able to purchase them through payroll deduction.
For those on expense-incurred plans, many are migrating their plans to fixed indemnity. Robertson explains it is a relatively simple process by which you take a look at expense incurred and create a similar plan while working with brokers to help those employers to continue offering benefits.
However, while making the switch is relatively simple, the timing is critical, he adds, saying they cannot wait until October. "When dealing with larger employers ... you have to begin the implementation process 180 days out and we [are past that point]," he explains. "Most of these employers will make the final decision through August. It's time to get started."
Question about the plans
Essentially, mini-meds are a package that offers a consumer or employer some limited benefits, in the sense that they are globally capped by year, explains Sabrina Corlette, research professor at Georgetown University's Center for Health Insurance Reform, in Washington.
However, there have been questions raised about how the plans could confuse users who believe they have full medical coverage but face thousands of dollars in charges during a catastrophic event. "It goes to how they are marketed and there is a real concern that some issuers of these policies market them in some deceptive ways," Corlette says. "That is absolutely a concern and particularly now when there is so much confusion and a lot of change in the health insurance marketplace."
Guidance released by HHS in December 2010 requires mini-med plans to notify consumers in plain language that their plan offers extremely limited benefits and direct them to healthcare.gov for more information about other coverage options.
"The Affordable Care Act is giving consumers more control over their health care by providing them with information about their health insurance options," said HHS Secretary Kathleen Sebelius, in a statement. "Now, we're taking an unprecedented step to ensure consumers are informed when they purchase policies that offer limited coverage."
Castiglione says his company makes it a priority to put disclaimer language in their materials and call centers.
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