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By December 1, 2010No Comments

Employers offering limited health benefit plans (“mini-med” plans) can do so without modifying them to comply with the Affordable Care Act, provided they obtain a waiver from the Department of Health and Human Services (HHS).

Many of the companies who offer mini-med plans are applying for these exemptions on behalf of their customers.

The mini-med plan market, which by some estimates covers more than 3 million Americans, has been rocked by the requirements of the Affordable Care Act. Mini-med plans, which offer limited benefits but low deductibles and co-pays, have become a cost-effective way for employers with high turnover and low wage earners to provide their employees with basic Health insurance. If mini-meds were forced to comply with the Affordable Care Act’s rules, including those that impose “minimum essential coverage” requirements or eliminate lifetime or annual caps on benefits, the entire market would dissolve, leaving 3 million Americans without even the most basic coverage.

As a result, mini-med plans have prevailed on HHS to grant them an exemption from the Affordable Care Act in order to protect basic coverage for their insureds. Employers must submit waiver applications at least 30 days before the beginning of the plan year for plans starting between September 23, 2010 and September 23, 2011. For calendar year plans, the deadline to apply for a waiver is December 1. Plans receiving a waiver must re-apply each year until the waiver program ends in 2014.

Any plan – not just mini-med plans — can apply for a waiver from the Affordable Care Act, provided they can show that:

  • The plan covers both full-time and part-time workers.
  • Without a waiver, premiums would rise so much that employers would drop the plan or workers would refuse to buy into them.

If you offer a min-med plan, contact your plan’s insurance carrier or your benefits broker to see if the plan has applied for or obtained an exemption. Note, however, that the exemptions are only a short-term fix. HHS will have some tough decisions to make about these plans when the exemption period ends in 2014. Ultimately, mini-meds might be the type of Health insurance coverage that dooms the Affordable Care Act’s requirement that all American citizens carry “minimum essential coverage” by 2014.

Article courtesy of Worklaw® Network firm Lehr Middlebrooks Vreeland.