As early as Tuesday, Sept. 28, employers using limited medical plans are facing many changes when grandfathered group health insurance plans begin to renew, states Fringe Benefit Group, Austin, Texas.
"The limited medical industry is undergoing massive change," says John Conkling, vice president of national accounts for Fringe Benefit Group. "Effective today, carriers will no longer be able to write new co-insurance based limited medical contracts. On renewals after today, some groups will be able to apply for waivers from the annual limits provisions, but there is a lot of uncertainty with regards to how the waiver process will work.
"Furthermore, companies who are actually granted a waiver will have to reapply upon renewal because the waiver is only good for one year. The good news is that because fixed indemnity supplemental benefit plans are not subject to the new regulations, they are still available to employers who want to offer employees a robust and affordable limited medical plan."
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Two styles of limited medical benefit plans exist: co-insurance and indemnity-based insurance. Fixed indemnity-style limited medical plans that do not distribute creditable coverage letters or characterize themselves as a "true group health insurance plan" are exempt from the new regulations, Fringe Benefit Group says, because they are filed as supplemental, as opposed to the coinsurance-based limited medical plans.
According to Fringe Benefit Group, health care legislation mandates that group health plans – as well as grandfathered plans – must meet new requirements, including no lifetime and annual limits, on or after September 23, 2010. Recently, the Department of Health and Human Services said waivers may be granted on the annual limits language for certain limited medical plans.
A carrier or a group can apply to the government for an exception if it can show many people not be covered because of the new requirements, Fringe Benefit Group says. Plans must reapply for a waiver for any following plan year prior to Jan. 1, 2014, when this waiver expires in accordance with future guidance from HHS. HHS has the right to make further modifications to the waiver process.
"There is absolutely no reason for a company or person to go uninsured because of the volatility of the limited medical marketplace," says Brian Robertson, executive vice president of Fringe Benefit Group. "Employers and brokers should be questioning the waiver process. For example, what if no exceptions are granted? And how will carriers handle the minimum loss ratio requirements?
"With so many questions unanswered – and with no definite timeframe for understanding when they will be answered – employers and brokers should make plans now to switch to a fixed indemnity supplemental benefit plan. We are still writing new business and renewing our current clients without any caveats on the plans related to government legislation."
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