Here’s a rundown on the changes of keenest interest to insurance advisors...
The U.S. Department of Health and Human Services has granted several companies waivers allowing them to maintain health coverage below the standards set by the Affordable Care Act. Among them, health insurance giants Cigna Group and Aetna Inc. Group were granted a large share of the annual limit restriction waivers, clearing them to continue offering limited-benefit plans.
The one-year waivers were issued to protect against the possibility that companies would start dropping people covered by very limited policies -- known as "mini-meds" -- typically offered to low-wage workers, such as those employed by restaurants or in farm work. Cigna received waivers for 265,000 policies, and another 209,423 went to Aetna.
"Some 1.4 million part-time workers depend on these plans to access basic medical services at an affordable rate," said Mohit M. Ghose, a spokesman for Aetna. "And until the exchanges are up and running, this is an important type of coverage that consumers want preserved." Ghose said the company is "pleased" about the waiver, and also about the ongoing talks over the medical loss ratio requirements for the limited-benefit plans.
Cigna says the decision allows the company's customers to continue to afford coverage for part-time, hourly and seasonal workers. "Without these limited plans, many of these kinds of workers would be without coverage," according to a company statement, which went on to say Cigna will continue to submit waiver requests each year until the end of their availability in 2014.
These initial waivers give a list of 30 HHS-approved companies a pass from the phasing out of annual limits on coverage -- an issue that had come into focus recently when McDonald's Corp. hinted it may have to drop its employees' plans, which are run by BCS Financial Corp. (BestWire, Oct. 4, 2010). BCS was among the firms receiving the waivers, specifically having annual limits waived for 115,000 enrollees.
BCS issued a statement saying: "We are proud of the valuable health care access we have provided McDonald's hourly wage employees. Through BCS, these employees are able to voluntarily purchase limited health care coverage at a price they can afford."
In background information posted by the IRS about this Affordable Care Act provision, it explained: "These interim final regulations provide for the Secretary of Health and Human Services to establish a program under which the requirements relating to restricted annual limits may be waived if compliance with these interim final regulations would result in a significant decrease in access to benefits or a significant increase in premiums."
The United Federation of Teachers Welfare Fund, receiving a waiver for 351,000 enrollees, was the largest recipient on the HHS list.
"Applications for waivers from annual limit requirements are reviewed on a case-by-case basis by department officials who look at a series of factors, including whether or not a premium increase significantly exceeds medical inflation or if a significant number of enrollees would lose access to their current plan because the coverage would not be offered in the absence of a waiver," said Jessica Santillo, an HHS spokeswoman. "Approved applicants are granted an annual limit waiver for one year."
Most Cigna insurers have current Best's Financial Strength Ratings of A- (Excellent), while Aetna insurers currently have ratings of A (Excellent).
(Jesse A. Hamilton, Washington bureau manager: Jesse.Hamilton@ambest.com)