Stripped-Down Health Plans Must Disclose Limitations To Consumers
Inexpensive health plans that go light on benefits may soon have to trumpet their drawbacks right up front. Something like:
Warning: This policy doesn't meet the new health law's minimum requirements and may leave you at risk financially.
Notices to be sent to more than 1.5 million people nationwide probably won't be worded exactly that way.
But, under requirements issued to employers and insurers today, the Obama administration will require plans that receive waivers from the health law's restrictions on annual benefit limits to write policyholders and spell out where their plans fall short -- and by how much.
The law bans annual dollar caps on coverage entirely in 2014, but restricts them in the meantime: The current minimum coverage limit is $750,000 annually.
But, under the law, the Department of Health and Human Services can grant waivers if insurers or employers show that meeting the new limits would lead to significant premium increases or cause substantial numbers of workers to lose their insurance.
Already, 222 insurers, unions and employers with policies covering 1.5 million people have been granted such waivers, including insurers Aetna and Cigna, and employers such as McDonalds, the Waffle House and Darden Restaurants.
Many individuals who buy their own insurance -- and some who get coverage through their jobs -- have plans that cap annual payments to less than that amount, sometimes to as little as a few thousand dollars a year.
Often called "limited benefit" or "mini-med" plans, the plans offer some coverage, often at a lower premium than more comprehensive insurance. Proponents say the coverage is better than none at all. Critics and federal regulators say such limits can leave policyholders "virtually uninsured" for the rest of the year once caps are hit.
The new guidance says those who get waivers must inform policyholders, employees -- and those considering enrolling in such plans -- that the policy doesn't meet the $750,000 annual limit minimum. The notices -- due out within 60 days -- must spell out each policy's annual cap. The plans vary widely, with coverage limits that can range from as little as $2,000 to $500,000 or more.
In addition to information on caps, other dollar limits in the policies -- such as restrictions on the amount of physician office care or hospitalization coverage -- must be detailed in letters and enrollment materials, says Steve Larsen, deputy director for oversight in HHS' Office of Consumer information and Insurance Oversight.
"This is clear notice that you have a policy that does not comply with the Affordable Care Act," says Larsen.
Critics have said the administration is letting too many plans escape some of the health law's new rules.
Sen. Jay Rockefeller, D-W.Va., held a hearing last week in which he said that those enrolled in such coverage often mistakenly think they have financial protection.
"By the time they realize they don't have real health insurance, it's too late. They have already received a huge hospital bill or have had their testing or surgery canceled because their so-called "health insurance" is worthless," Rockefeller said in opening remarks.
The new notices should help people understand the limits of their policies. That could help them avoid surprises -- or possibly shop for better coverage or a job with better benefits, says law professor Timothy Jost, who also serves as a consumer representative at the National Association of Insurance Commissioner.
"Letting people know you sort of have benefits, but they're not worth very much, is important," says Jost.
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