Reprinted from HEALTH PLAN WEEK, the most reliable source of objective business, financial and regulatory news of the health insurance industry.
There is no doubt that limited medical coverage plans, known as mini-med policies, are going away at the end of 2013 since the Affordable Care Act (ACA) does not permit the type of coverage caps these inexpensive, low-coverage products offer. But at least one health insurance industry representative sees the possibility for a type of mini-med plan to survive the reform law.
“While mini-meds will cease to exist, something very similar to them may be around. The [Obama] administration is thinking through this issue, to how this might be done so that employers can offer a secondary plan, a skinnier version of a full coverage plan,” John Greene, vice president, congressional affairs for the National Association of Health Underwriters (NAHU), tells HPW.
As an example, he says a health plan offered by Aetna Inc., would meet the qualifications of the reform law, but the insurer may be able to slim down such a product for very low-income people. “Putting everyone into an exchange plan will be very expensive. This is one of things [administration officials] are sorting through. Such a plan would not be as robust; it would be like a ‘young and invincible’ plan,” Greene says. Any such quasi-mini-med plan would also have to include no lifetime restrictions and would not correspond to any metal tier in the exchanges, he adds. “There are a lot of moving parts,” Greene says.
Aetna did not respond to an interview request on the future of mini-med plans.
A final rule issued Jan. 30 by HHS and the IRS on affordability of coverage and access to premium tax credits has some consumer advocates concerned that the rule’s definition of affordable health coverage offered by employers is too narrow, according to HPW sister publication AIS’s Health Reform Week. These advocates warn that the rule would exclude many employees from receiving exchange subsidies.
Under the ACA, workers whose annual income is less than 400% of the federal poverty level and who are offered job-based coverage that is deemed unaffordable can opt out and instead gain coverage through exchanges with the help of subsidies. But because the rule defines the affordability standard as an amount less than 9.5% of household income just for an employee’s share, the worker would be eligible for subsidies only if the employer’s coverage option costs more than 9.5% of his or her income. The rule also says that the subsidy eligibility percentage applies only to individual and not family plans, which are far more expensive. Consumer groups have said the affordability definition should be based on the cost of a family plan, not individual coverage. They further argue that the failure to address this issue likely will mean that many families will be priced out of getting health coverage due to the high threshold in order to qualify for subsidies.
An estimated 2 million people, primarily low-wage and part-time workers, are covered by such mini-med plans, which are still operational in 2013 because of waivers granted by the Obama administration to allow them to exist until 2014.
Officials with trade groups representing industries that offer the most mini-med plans say they don’t expect such products to have a second life under reform. “It is my impression that these plans are done because annual limits [on the dollar value of essential health benefits] are prohibited after 2014. That issue has been decided for a couple of years now,” Michelle Neblett, director of labor and workforce policy for the National Restaurant Association, tells HPW.
Neil Trautwein, vice president and employee benefits policy counsel at the National Retail Federation, tells HPW the employees who previously received mini-med insurance will now have to go onto the exchanges, explore Medicaid in their state, go on a parental plan if they are under age 26 or accept paying more for a full health plan under an employer benefit. The buzz around mini-med plans was “very hot” when the ACA was signed into law in 2010, but attention has shifted to compliance with the law after the mini-med waivers were issued, Trautwein says.
The reform law mandates that all employers with 50 or more full-time equivalent employees will need to offer coverage that includes mandated essential health benefits. Employers that opt not to offer coverage must pay an annual $2,000 per-employee penalty. Employees are considered full time under the law if they average 30 hours or more a week on a monthly basis. This stipulation has caused some employers with large numbers of part-time, often lower-wage, workers, to weigh the idea of cutting back hours to prevent workers from hitting the 30-hour-per-week threshold. Darden Restaurants, Inc., owner of the Olive Garden chain among others, and Wal-Mart Stores, Inc., have considered changes (HPW 12/10/12, p. 1). And last July, McDonald’s Corp. said that complying with the ACA’s coverage provision would cost individual McDonald’s restaurants between $10,000 and $30,000 a year. The mini-med policy most popular among McDonald’s hourly employees has an annual limit of $2,000 and an annual premium of $750 (HPW 7/30/12, p. 1).
Peter Hayes, principal at consulting firm Healthcare Solutions, tells HPW that he envisions the state-based exchanges eventually offering supplemental or add-on coverage for condition-specific consumer health problems. “Exchanges will offer basic plans, but someone like Aflac will be able to come in and offer coverage in addition to that,” he says.
Although criticized for being an incomplete version of health insurance, Steve Wojcik, vice president of public policy, National Business Group on Health, tells HPW that mini-med plans served a function, allowing employees who could not afford their share of traditional health benefits to still have some coverage. “Now that these plans are ending, for individuals this means they hopefully qualify for federal subsidies and the exchanges are up and running smoothly next year,” he says. “Otherwise, it will be the opposite of what the Affordable Care Act promised to do.”
© 2013 by Atlantic Information Services, Inc. All Rights Reserved.
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