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HHS Shines Light, Limits Expansion of 'Mini-Med' Plans

By Dena Bunis, CQ HealthBeat Managing Editor

December 9, 2010 -- Federal officials made it clear that only under two limited circumstances can insurers who have received waivers to continue offering so-called "mini-med" health plans sell more of these policies. And for all of these limited coverage plans, companies must alert consumers that such insurance does not meet the minimum coverage standards required under the health care overhaul law.

Health and Human Services officials began issuing waivers for these plans—used mainly to cover part-time and low-wage workers—because they were concerned that companies such as McDonald's might drop insurance for employees if they had to abide by the rules of the health law (PL 111-148, PL 111-152). The plans put a far lower annual limit on coverage than the minimum $750,000 called for under the law.

As of 2014, these mini-med plans will be outlawed. "Unfortunately, today,'' HHS Secretary Kathleen Sebelius said in a news release, "mini-med plans are often the only type of private insurance available to some workers.'' And because of that, the waiver program was started. Policy holders who want waivers have to prove to HHS that without the plans, they would either see a large increase in their premiums or would no longer have access to coverage.

Concerned that once insurers received a waiver they would continue to sell mini-med policies, HHS issued guidance Thursday spelling out the two situations under which the policies could be sold. The first is when a state requires insurers to offer coverage with low annual limits and that state has received an HHS waiver. The second is when an employer with a waiver wants to change insurers and still be able to offer mini-med plans.

The waivers, the HHS materials stress, are only good for one year. So insurers or states that want to continue selling them after a year would have to apply for a new waiver.

HHS's guidance also spells out what insurers must tell people who are getting these mini-med plans. Insurers have to provide the information in "14 point bold type" on the front of any insurance materials sent out to consumers. HHS provided model language that tells people that their insurance plan "does not meet the minimum standards required by the Affordable Care Act" when it comes to dollar limits on coverage. Sebelius sent a letter to consumer groups explaining the new notice requirements.

There's been an explosion in the number of mini-med waivers HHS has granted. As of October, HHS had given permission to 30 companies to sell such policies. In November, that number swelled to 111 and covered 1,175,411 workers. As of Dec. 7, the most recent date for which data is available, 222 waivers had been approved, covering1,507,418 people.

"Prior to the Affordable Care Act, there was little public data available on these plans,'' HHS officials said in an e-mail. "The notification requirement is part of our strategy to ensure consumers have the information they need and keep the coverage they have as we move to the consumer-focused system in 2014. This is just another area where we are shining light for consumers on an otherwise non-transparent industry."

Sen. John D. Rockefeller IV, who has railed against these plans and did so at a recent Senate hearing, called the HHS announcement "a small but important step forward for consumers.''

"Consumers need to get the straight story about 'mini-med' policies that do not protect them if they get seriously sick or injured,'' Rockefeller said in a statement. "We pledged to bring more transparency to the health care process. I've heard firsthand about the devastating impact that inadequate coverage can have on individuals and families. These 'mini-med' policies have gaping holes in coverage and do not help with serious health problems. I am encouraged by HHS taking this step to begin to improve consumer protections as we transition to a fully reformed insurance market in 2014."

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