HHS Signals New Waivers for Mini-Med Plans
A flurry of media activity followed the Wall Street Journal’s September story that 30,000 McDonald's employees could lose their healthcare if HHS did not grant them a waiver from the Obamacare requirements. A waiver was granted, confirming the belief of many that Obamacare was a mistake.
As it turns out, McDonald's, and other employers that offer “mini-med” plans to their employees, actually need two waivers if their mini-med plans are to survive.
The first waiver waives the requirement that health insurers offer plans with annual limits of no less than $750,000 per year. This is necessary since many of these plans have annual limits of as little as $2,000 to $10,000 per year. This waiver has been received by 111 organizations so far.
A second waiver is also needed to waive the requirements of the Medical Loss Ratio (MLR) (described in detail elsewhere in this newsletter). Mini-med plans cost more to operate. So much so, that they would not be able to operate if they would be required to spend 80% to 85% of premiums on health benefits.
On October 5, 2010, HHS released guidance stating that the new MLR regulation will include, at least for 2011, “special methodology that takes into account the special circumstances of mini-med plans in determining how administrative costs are calculated for MLR purposes (and thus how MLR ratios are calculated for such plans).”
In addition, there will be a process for entire states to request a waiver if they believe the MLR will destabilize their insurance markets. The form for states to apply for this waiver, though not yet released to the public, appears to have been sent to the White House Office of Management and Budget for approval.