With a potential U.S. Supreme Court ruling expected at the earliest in the summer of 2012 and the Obama administration's desire to keep implementing the PPACA, uncertainty remains about what will happen to limited medical plans on Jan. 1, 2014.
If nothing changes, the "grandfathered" plans and those which received annual limits waivers will be taken off the market. Unless the Supreme Court overturns the entire Act, the options for hourly and part-time workers will look much different in the very near future.
So, what options exist for brokers and their clients? A very common approach has been to "wait and see" what happens. These employers have kept their current plans, preserved their grandfathered status and are waiting to see what the next move will be. Who would have predicted that HHS would scale back the PPACA's implementation so that three million limited medical plan participants could keep their coverage? Some experts have suggested the high number of union plans that utilized this form of coverage helped the administration make this tough decision that consumer advocates and some U.S. senators saw as counterproductive.
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It's always possible that the tides may shift again and toss a life preserver to the expense-incurred limited medical plans, but the large carriers aren't putting much weight behind that outcome. They are moving forward in other directions and getting ready for the next generation of benefit programs. So, what are the options available to brokers today?
There are many reasons why now is the best time to switch your clients to a fixed indemnity-style limited benefit plan which is not affected by the health care legislation.
Fixed indemnity plans are exempt from the PPACA and will still be able to provide coverage in 2014 and beyond. The expense-incurred plans which have been granted waivers will be taken off the market. After December 31, 2013 all of the expense-incurred plans will be obsolete, but fixed indemnity plans will still be available and valued by employees. The fixed indemnity plans will not satisfy the PPACA's employer or individual mandates – but they will be available if an employer wants to provide benefits to their part-time (less than 30 hours a week) employees.
Fixed indemnity plans have minimal exposure to medical trends, since they pay a specific amount and not an amount based off incurred charges. In 15+ years working with these plans, it's been our experience that when rated properly, customers will enjoy a stable plan with minimal rate actions by the carrier. If you are looking for options for your clients, make sure your provider is giving you multiple year rate guarantees and rate caps.
There is still some uncertainty about the medical loss ratio (MLR) waivers that HHS provided. Carriers were given an exemption from the 85 percent (for large group) MLR in 2011. They were told they could double their experience in 2011, but they would be required to file quarterly reports with HHS. HHS would then review the data that has been submitted and said they might re-address this issue with the carriers. We are not sure how the rebates would be handled if HHS decides to enforce the 85 percent minimum MLR statute.
Carriers are actively filing new products and developing their strategies for PPACA's full implementation in 2014. By moving to a fixed indemnity limited benefit plan now you can beat the rush and work with an experienced leader in the fixed indemnity marketplace. The new plans and new products that are coming out have not been tested, so don't be a guinea pig for some other carrier's new products. Experienced partners can make the transition easy on your client's HR department.
What other essentials do you need? Make sure your limited medical provider has an administrative platform that makes the day-to-day operations of the plan run smoothly. There are numerous online capabilities which your clients will greatly appreciate. First, they have plan information at their fingertips 24/7/365. Online Missed Premium payment and eligibility look-up makes keeping benefits continuous a simple and easy process.
With so much uncertainty with regard to the annual limit waivers, medical loss ratio exemptions and the implementation of PPACA [Read "Most Americans say individual mandate is unconstitutional"]—brokers and groups should know there are affordable, robust and proven limited medical options available for them today—there's no need to continue to play the wait and see game.
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