With the passage of the Patient Protection and Affordable Care Act (“PPACA”) and the Health Care and Education Reconciliation Act of 2010, Americans face a new era in health insurance. While there is still much guidance to come from the government,
Major changes to the limited medical industry are coming this Fall. Limited medical plans will be subject to new rules. Policy holders should contact the carrier ask them how the new laws will affect their plans.
Employers utilizing limited medical plans are facing many changes, beginning as soon as September 24, 2010 when grandfathered health insurance plans begin to renew. Group health plans, even those which have been grandfathered, will have to meet new requirements, including no lifetime and annual limits, on or after September 2010. All limited medical plans that were considered “group health insurance plans;” plans that issued Letters of Creditable Coverage under HIPAA; plans identified as Limited Major Medical Plans that function similarly to traditional group plans with co-pays, deductibles, co-insurance and an annual overall maximum or a separate inpatient/outpatient maximum; will be subject to these new regulations.
Within the limited medical industry, there are two styles of limited medical benefit plans: coinsurance and indemnity-based insurance. 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, as opposed to the coinsurance-based limited medical plans, which are.
Employer groups renewing after September 23, 2010 that are currently on a limited medical plan subject to the health care reform rules regarding the removal of annual and lifetime limits have several options:
1) Their carrier will not renew the plan because it cannot meet the new rules;
2) They are renewed with significant rate increases; or
3) They move to a fixed indemnity style limited medical plan
If you are a policy holder of one of these types of plans it’s important to contact the carrier for more information.