The Department of Health and Human Services (HHS) has just announced that it is ending the process for obtaining waivers of the annual limit restrictions on health plans. Group health plans that might want to extend an existing waiver or to request a new waiver must act not later than September 22, 2011.

Action Required: Submission of waiver application to HHS

Deadline: September 22, 2011

Background

In June 2010, HHS issued interim final regulations¹ under section 2711 of the Public Health Service Act as amended by the Affordable Care Act. Under the interim regulation, restricted annual limits apply on essential health benefits for plan years beginning before January 1, 2014. The restricted annual limits apply to grandfathered group health plans as well as those that are not grandfathered.

HHS recognized that the imposition of restricted annual limits would increase the cost of providing essential health benefits under existing plans. Therefore, the regulations provided that the restricted annual limits may be waived by HHS. Guidance on the scope and process for applying for a waiver was issued later.

See our previous Cheiron Health Alert of September 10, 2010.

End to Waiver Program

By memorandum dated June 17, 2011, HHS announced that after September 22, 2011, it will not accept any applications for extensions of existing waivers nor will it accept any new applications for waivers. Prior waiver applications and approvals were only good for one plan year. Accordingly, any group health plan that has an existing waiver must complete and submit the waiver extension form between June 24 and September 22, 2011. If a waiver application (including a request for an extension) is approved, the waiver will be good through the date specified in the application, but not later than December 31, 2013.

Many group health plans that did not need to apply for a waiver for this plan year may now need to do so because their current annual limits are greater than $750,000 but less than $2 million (see the chart below). For group health plans with multiple Benefit Options, the plan may need to file an application for some additional benefits options. The application needs to specify which benefit option(s) in the group health plan the waiver is being filed for.

Below is a chart that shows the minimum required Annual Limit without a waiver.

*Before January 1, 2014

Please note:

Below is a link for the most current waiver application:

http://cciio.cms.gov/programs/marketreforms/annuallimit/index.html

For a copy of the memorandum:

http://cciio.cms.gov/resources/files/06162011_annual_limit_guidance_2011-2012_final.pdf

Specific questions or request for additional information can be emailed to:

AnnualLimitWaiver@cms.hhs.gov

Cheiron Observation: Cheiron consultants can assist with the preparation of an extension or application and supporting documents to demonstrate the increase in cost of the restricted annual limits. To avoid missing the deadline, we recommend you discuss this with your Cheiron consultant as early as possible.

¹ The regulations were jointly issued by HHS, the Internal Revenue Service, and the Department of Labor (DOL) under the sections of law for which the agencies have responsibility.