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Monday, July 18, 2011
A "mini-med" plan, a lower-cost plan that pays out a low dollar amount for health benefits, is available through a group health plan only until 2014 and only with a temporary annual limit waiver from the Department of Health and Human Services. Without a waiver, a mini-med plan and its sponsoring employer violate the Patient Protection and Affordable Care Act, the tax Code and ERISA.
PPACA prohibits annual limits on essential health benefits beginning in 2014 but permits group health plans to phase in restricted annual limits (currently a minimum of $750,000, increasing to $1.25 million for plan years beginning on or after September 23, 2011, and to $2 million for plan years beginning on or after September 23, 2012), until January 1, 2014. A mini-med plan, which typically is offered to part-time or seasonal workers, does not meet these minimums, so it needs a waiver.
HHS will grant a temporary waiver to a plan offered before September 23, 2010 (or later, if it is state-mandated), based on the plan’s certification that a waiver is necessary because compliance with existing limits would result in a significant increase in participant premiums or a significant decrease in access to coverage. Although HHS has indicated that all plans with restricted annual limits below $2 million have a reasonable opportunity to apply for a waiver, it has used the example of a plan with an annual limit of $10,000 on essential health benefits as "the most likely type of plan to need" a waiver.
HHS has revised its application form and set a final deadline of September 22, 2011, for its receipt of applications for new waivers or extensions of existing waivers. A plan that meets this deadline and obtains a waiver may extend its waiver to January 1, 2014, by resubmitting its application information to HHS in updates due by the end of 2012 and 2013, providing an annual notice informing each eligible participant that the plan does not meet the minimum annual limits for essential health benefits and has received a waiver, and maintaining records as required by HHS.
-- Nadia Masri, Tax Law Editor (Compensation Planning)
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