By John Conkling, Vice President of national accounts
Q. What does the PPACA say about limited medical plans?
A. Group health plans, even those that have been grandfathered, will have to meet new requirements, including no lifetime and annual limits, on or after Sept. 23, 2010. Employers utilizing limited medical plans (also known as limited benefit plans or mini-meds) are facing many changes because all limited medical plans that were considered group health insurance plans will
Those affected include plans that issued Letters of Creditable Coverage under HIPAA; plans identified as Limited Major Medical Plans that function similarly to traditional group plans with copays, deductibles, co-insurance, and an annual overall maximum or a separate inpatient/outpatient maximum. Sometimes these are called “fixed indemnity” plans, and they are also referred to as co-insurance based plans.
Q. How do I determine if my clients will be affected?
Those affected include plans that issued Letters of Creditable Coverage under HIPAA; plans identified as Limited Major Medical Plans that function similarly to traditional group plans with copays, deductibles, co-insurance, and an annual overall maximum or a separate inpatient/outpatient maximum. Sometimes these are called “fixed indemnity” plans, and they are also referred to as co-insurance based plans.
Q. How do I determine if my clients will be affected?
A. Take action now. There is no time to wait—especially for large employers on co-insurance based plans who need several months (not days) to switch plans. First, call your broker, and if you are an insurance adviser, start talking to your carriers. Ask if they are still writing new business, and if so, inquire about your renewal. If you’ve been in the plan for more than a year, they should have an idea of what your rate increase will look like. If they can’t tell you, then ask when you will be able to see your renewal.
Q. If my client is currently in a co-insurance based plan, what options do I have to
A. Don’t despair! Fixed indemnity style limited medical plans that do not issue creditable coverage letters or represent themselves as a “true group health insurance plan” are exempt from the new regulations because they are filed as supplemental and not subject to these new regulations. Look for limited medical plans that offer great service and administration and rate guarantees until Dec, 31, 2013. Carriers are still writing new business for groups of all sizes. Putting employees in a robust, well-administered limited medical plan will enable HR staff to focus on the bigger picture of the future of health care delivery inside their organizations.
Q. What will happen to the co-insurance based limited medical plans?
A. Several scenarios could unfold. Carriers may not renew the plans, because they cannot meet the new coverage mandates for group plans, or they may renew some plans but with significant rate increases to pay for expanded coverage. Some carriers are taking a wait-and-see approach to determine if the government will grant them an extension, but that’s not a strategy I’d recommend proactive brokers to follow. Companies, particularly large ones, need to know soon if they are going to have to switch plans or absorb a significant rate increase.
Q. Have you seen any carriers changing strategy on their limited medical products?
A. Absolutely. We have seen several situations where some carriers have announced that they are pulling out of the limited medical business entirely. We’ve also seen some carriers
Q. For the broker community, what’s the future look like?
A. There are several renewal seasons between now and 2014, so start thinking about ways to offer value to your clients as they wrestle with understanding what the future holds. This is the time to earn your paycheck. Provide your clients with guidance and advice on their options. If you don’t get in front of them and provide them with some answers, then I guarantee someone else will.
About the Author:
John Conkling is vice president of national accounts for the Fringe Benefit Group, Austin, TX, a firm that designs and administers the Framework Health Plan, afixed indemnity-style limited benefit medical plan. He may be reached at 800-662-6177 or #jconkling[at]frameworkhealthplan.com.