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 Creative Health Benefits Solutions for Today, Strong Policy for Tomorrow 

 

August 27, 2010 

The Honorable Kathleen Sebelius 

Secretary 

U.S. Department of Health and Human Services 

Office of Consumer Information and Insurance Oversight 

Attention: RIN 0991–AB69 

OCIIO–9994–IFC 

REG–120399–10 

Hubert H. Humphrey Building 

200 Independence Avenue, S.W. 

Room 445G 

Washington, DC 20201 

The Honorable Hilda L. Solis 

Secretary 

U.S. Department of Labor 

Employee Benefits Security Administration 

Office of Health Plan Standards and Compliance Assistance 

Attention: RIN 1210–AB43 

200 Constitution Avenue, N.W. 

Room N–5653 

Washington, DC 20210 

The Honorable Timothy F. Geithner 

Secretary 

U.S. Department of the Treasury 

Attention: RIN 1545–BJ61 

REG–120399–10 

OMB Number: 1210–0143; 1545– 

2179 

Internal Revenue Service 

1111 Constitution Avenue, N.W. 

Room 5205 

Washington, DC 20224 

Re: Interim Final Rules for group health plans and health insurance coverage in the group 

and individual markets under provisions of the Patient Protection and Affordable Care 

Act (Affordable Care Act) regarding preexisting condition exclusions, lifetime and 

annual dollar limits on benefits, rescissions, and patient protections. 
NATIONAL BUSINESS GROUP ON HEALTH 

Dear Secretaries Sebelius, Solis, and Geithner: 

The National Business Group on Health (Business Group) appreciates the opportunity to 

submit comments on the Interim Final Rules for group health plans and health insurance 

coverage in the group and individual markets under the Affordable Care Act regarding 

preexisting condition exclusions, lifetime and annual dollar limits on benefits, 

rescissions, and patient protections. We hope that our recommendations will assist you to 

allow group health plans and insurance providers to continue to provide affordable, highquality coverage, particularly with respect to “mini-med” or limited benefit medical plans 

that frequently cover part-time, seasonal, contract and temporary employees until they 

can obtain access to coverage in the state health care exchanges in 2014. 

The National Business Group on Health represents approximately 296, primarily large, 

employers (including 64 of the Fortune 100) who voluntarily provide health benefits and 

other health programs to over 55 million American employees, retirees, and their 

families. 

We applaud the Department of Health and Human Services’ (HHS) consideration of an 

exemption or waiver for “min-med” plans from the Affordable Care Act’s prohibition on 

annual benefit limits until the exchanges begin in 2014 (or beyond). Because most limited 

benefit plans have lower annual limits to keep premiums affordable, exempting these 

plans or establishing a process for waiving these requirements is critical for the 1.4 

million people and their families who depend on them as a source of coverage. It is also 

critical for employers who want to continue to offer coverage to employees currently in 

these plans. 

According to Mercer’s National Survey of Employer-Sponsored Health Plans (2009), 7% 

of large employers offer “mini-med” or limited benefit plans with over 49% enrollment 

for employers with 50-499 employees. Employees covered by limited benefit plans 

include those in the manufacturing, wholesale (51%), retail services (49%), grocery, 

waste management, transportation, restaurant and hospitality industries, often as a bridge 

or transition to more comprehensive coverage. 

 

“Mini-med” or “mini-medical” plans, also known as limited medical benefit plans, offer a 

viable, affordable, alternative to expensive, comprehensive major medical insurance 

frequently for part-time, but also for full-time employees. These plans are COBRA 

compliant, reduce turnover, decrease absenteeism and increase the attraction and 

retention of employees. 

Employers may use limited medical benefit plans as either primary insurance or 

supplemental coverage. Unlike comprehensive major medical insurance, many limited 

medical benefit plan designs do not base their benefits on actual charges incurred and 

actually pay based on a fixed benefit indemnity amount when various health care services 

are utilized. Many employers and employees, and individuals prefer limited medical 

benefit plans because they carry a first dollar benefit. The typical limited medical plan 

includes doctor’s office visits, prescription drugs, wellness, outpatient diagnostic lab and 

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NATIONAL BUSINESS GROUP ON HEALTH 

X-Ray, emergency room for accident, hospital and surgical coverage. Sometimes, limited 

medical benefit plans are offered with deductibles or co-payments and have annual limits 

on benefits and maximums. Plans may even include Preferred Provider Organization 

(PPO) networks, dental, vision, prescription drug coverage, a nurse line for the purpose 

of reducing visits to health care providers, lab programs and Flex 125 participation. 

In order to assist you with the administration of the Interim Final Rules, we make the 

following recommendations, which reflect the suggestions and concerns of our member 

companies: 

I. Exempt Limited Benefit or “Mini-Med” Plans from the Annual Limit 

Restrictions until 2014; 

II. Establish an Annual Waiver Process for “Mini-Med” Plans from the 

Annual Limit Restrictions until 2014 as a Secondary Option; 

III. Clarify that Plans may Maintain Annual Dollar Limits on Out-ofNetwork Benefits; and 

III. Exempt Stand-Alone Health Reimbursement Arrangements (HRAs) from 

the Annual Limit Restrictions. 

I. Exempt Limited Medical Benefit or “Mini-Med” Plans from the Annual 

Limit Restrictions until 2014

Recommendation: The Departments should exempt grandfathered limited medical 

benefit (“mini-med”) plans from the restrictions on annual limits until participants 

can access the state exchanges in 2014 (or beyond). 

Recommendation: The exemption should last until: (a) the last date of plan year 

ending on or after January 1, 2014; (b) the last date of plan year in the year when 

exchanges are operational in a given State; or (c) the last date of plan year in year 

when subsidies for comprehensive coverage are available, whichever occurs last. 

Because most limited benefit plans have lower annual limits, exempting these plans from 

the annual limit restriction is critical for employers who offer them to continue to so. If 

the Departments do not exempt “mini-med” plans from this requirement it would result in 

much higher premiums, less access and possibly abruptly end this coverage for 1.4 

million primarily part-time, seasonal and temporary employees and their families 

beginning later this year. In fact, a majority of this population would likely be without 

coverage until 2014. 

For example, one Business Group member company stated that they want to continue to 

offer coverage to all of their employees, but if their “mini-med” plans were forced to 

change they would have almost 9,600 employees who may not be able to afford this 

coverage on January 1, 2011. In addition, the company cannot absorb the increases to 

these plans and would need to increase premiums on their employees which would also 

increase adverse selection against the plans and continue to increase their costs to provide 

coverage to their employees. The company’s only other option would be to drop the plans 

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NATIONAL BUSINESS GROUP ON HEALTH 

completely and not offer health care coverage to 34,000 part-time employees and reduce 

the health care options available to their full-time employees as well. Clearly, it was not 

the intention of the Congress or the Administration to increase the number of uninsured 

by eliminating the ability of employers to offer “mini-med” plans to their primarily parttime employees before they are eligible for exchange coverage in 2014. 

II. Establish an Annual Waiver Process for “Mini-Med” Plans from the 

Annual Limit Restrictions until 2014 as a Secondary Option;

Recommendation: The Departments should establish an annual waiver process 

from the restrictions on annual limits for grandfathered limited medical benefit 

(“mini-med”) plans until participants can access the state exchanges in 2014 (or 

beyond). 

As a secondary option to exemption from the annual limit restriction, establishing a 

process at HHS for plans to obtain annual waivers is a logical step towards complying 

with Section 1255 of the new health care law that guarantees people’s ability to maintain 

their current levels of coverage. 

Recommendation: HHS’ waiver process should allow insurance carriers and/or 

third party administrators to apply for waivers from the restrictions on annual 

limits by product on behalf of employer sponsors. Using this approach, the carriers 

could apply for 1 waiver for all group plans under that particular limited medical 

product. 

Allowing insurance carriers to apply for 1 waiver for all group plans under a particular 

limited medical product would: 

1) Minimize the number of waivers that need to be applied for on behalf of plan 

sponsors/employers; and 

2) Also minimize the work load on HHS’ end, since there would be fewer waivers to 

approve. 

Allowing TPAs or insurers of employer plans to provide information for the waivers on 

behalf of employers would facilitate the efficient information flow between HHS and 

plans and reduce the administrative costs for employer plans—many of whom use the 

same administrators and carriers to provide this coverage to their employees. If the plan 

is self-insured, the plan sponsor/employer may need to apply for the waiver directly. 

Recommendation: The HHS Secretary’s waiver program should define a 

“significant decrease in access to benefits” as the change in total cost of the plan by 

more than 20% or if employees’ average premiums are more than 9.5% of 

individual employees’ average weekly wage. We recommend defining a “significant 

increase in premiums” as an increase in anticipated premium of greater than 

Medical Inflation plus 15% or alternatively, an increase in anticipated premium of 

50% or more. For limited benefit plans that self-insure, a significant increase in 

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NATIONAL BUSINESS GROUP ON HEALTH 

premiums should be interpreted as a significant increase in employer or employee 

contributions.

We believe 20% is a reasonable threshold to measure a significant decrease in access to 

benefits. Using 9.5% of average weekly wages as a measure that results in unaffordable 

weekly health care premiums would be consistent with other parts of the law that define 

unaffordable using a similar percentage of income. 

Recommendation: The Departments should design an internet application to 

process the applications for the “mini-med” waivers (with a defined review period 

(i.e. within 2 business days), updates, certification and the anticipated cost to 

employers and employees if waivers are not approved) similar to the Medicare Part 

D Retiree Drug Subsidy Application and the recent Retiree Reinsurance Program. 

An internet application for the waiver process would allow for continuous updates as to 

when the waiver process would conclude, immediate notification when the application 

would be approved/denied and changes that denied plans would need to make in order to 

appeal and come into compliance. 

Recommendation: The Departments should also include a process whereby “minimed” plans denied waivers may have an opportunity to appeal and modify their 

applications to comply with the requirements of the waiver. 

III. Clarify that Plans may Maintain Annual Dollar Limits on Out-ofNetwork Benefits;

Recommendation: The Departments should clarify that plans may maintain annual 

dollar limits on out-of network benefits. 

Employers use their flexibility under the Employee Retirement Income Security Act 

(ERISA) to “bend the cost curve” by paying providers higher or lower payments based on 

the relative quality and cost of care provided to their employees and by negotiating lower 

rates for providers who meet plan standards and agree to accept in-network rates. In the 

recent Interim Final Rules, the Departments allowed plans to maintain cost sharing 

requirements when plan participants receive preventive care services out-of-network. 

Accordingly, we recommend the Departments ensure consistency and apply that same 

principle in this case. Because the interim regulations are ambiguous on this point, we 

recommend that the Departments clarify that employers and health plans may maintain 

annual dollar limits on out-of-network benefits. This clarification will help plans 

encourage plan participants to go to higher quality providers, improve the quality of care 

for employees, and keep plan costs more affordable. 

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NATIONAL BUSINESS GROUP ON HEALTH 

IV. Exempt Stand-Alone Health Reimbursement Arrangements (HRAs) from 

the Annual Limit Restrictions

Recommendation: The Departments should preserve stand-alone HRAs by 

exempting these plans from the annual limit restrictions. 

Based on the Interim Final Regulations, it appears that stand-alone HRAs with typical 

annual limits will not satisfy the prohibition. HRAs are entirely employer-paid health 

care accounts where employees can make tax-free withdrawals for qualified medical 

expenses. They do not provide health benefits, but are dollar accounts used to help pay 

for medical expenses. Subjecting them to annual benefit limit requirements therefore, 

does not make sense. 

Employers use HRAs (both stand alone and together with high-deductible health plans 

(HDHPs)) to help employees afford their health care expenses. Some employers rely 

upon stand-alone HRAs for employees because that is all they can afford to help offset 

employees’ health care costs. If stand-alone HRAs do not receive an exemption from the 

annual limit requirements, some employers may cease to offer these benefits, leaving 

employees with higher out-of-pocket costs and no employer assistance. We believe that 

this result runs counter to the intentions of the President and the Congress in the new 

health care law to help people to maintain their current coverage. 

Thank you for considering our comments and recommendations. We look forward to 

continuing to work with you as you implement the various provisions of the new law. 

Please contact me or Steven Wojcik, the National Business Group on Health’s Vice 

President of Public Policy, at (202) 585-1812, if you would like to discuss our comments 

in more detail. 

Sincerely, 

Helen Darling 

President 

cc: The Honorable Phyllis C. Borzi, Assistant Secretary, Employee Benefits and 

Security Administration 

 Mr. Jay Angoff, Director, Office of Consumer and Insurance Oversight 

 The Honorable Douglas H. Shulman, Commissioner, Internal Revenue Service 

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