Mooney, Green, Saindon, Murphy & Welch, P.C.

1920 L Street, N.W.
Suite 400
Washington, DC  20036

Telephone: 202-783-0010
Telecopier: 202-783-6088 

Summer 2011

  This is one of a continuing series of updates on recent developments in the law affecting labor rights and employee benefit plans.

HHS OPENS ANNUAL LIMIT WAIVER PROGRAM FOR 2012-2013

The CCIIO was formerly the Office of Consumer Information and Insurance Oversight.

            On June 17, 2011, the Center for Consumer Information and Insurance Oversight (CCIIO), the Department of Health and Human Services office that is responsible for oversight of the new healthcare reform laws, announced the opening of the annual limit “waiver” program for plan years beginning on or after September 23, 2011.  Although the standards remain generally the same as for the current year, the application deadline is surprisingly early—September 22, 2011.

Background

The new healthcare laws are generally referred to as the PPACA and are a combination of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act.

As you will recall, the new laws generally ban lifetime benefit caps in covered health plans for all plan years beginning on or after September 23, 2010.  Furthermore, under regulations previously issued by the CCIIO, annual maximum benefit limits are generally restricted as follows: 

For Plan Years Beginning		Minimum Permitted Annual Benefit Limitation
On or After:	And On or Before:
September 23, 2010	September 22, 2011	$750,000
September 23, 2011	September 22, 2012	$1,250,000
September 23, 2012	December 31, 2014	$2,000,000
January 1, 2014		Prohibited Entirely

 

These restrictions apply to both to overall plan limits (other than for “excepted benefits”) as well as to internal restrictions on individual “essential benefits.”  For more information on “essential benefits” and “excepted benefits,” see Protecting Against Catastrophic Loss Post-Health Care Reform – Legal Aspects (http://www.mooneygreen.com/Catostrophic_protection_IFEBP-2010-Annual-Conf/Protecting Against Catastrophic Loss Post-Health Care Reform Revised.pdf).

For plan years beginning prior to January 1, 2014, the CCIIO implemented a “waiver program” permitting plans that meet the stated criteria to retain lower annual limits.  Initially, applications for waivers were restricted to the single plan year beginning prior to September 23, 2011. 

The New Waiver Program Opens

The CCIIO has now announced the waiver program for the remaining two plan years before annual limits are banned entirely.  Applications under the new program may be filed as early as June 24, 2011.  At the same time, the CCIIO announced that it is closing the program so that waiver applications will no longer be accepted after September 22, 2011.

This application form is a Microsoft Excel spreadsheet, and the completed application, and any other spreadsheets filed with the application, must be filed in Excel format.  Applications converted to any other format, including Adobe pdf documents, will not be accepted.  Furthermore, effective June 17, 2011, the application form previously used for waivers will no longer be accepted.

            Instead of being for only a single year, plans will be required to file a single waiver application for the remaining plan years until waivers are no longer permitted beginning in 2014.  Plans that have previously received waivers must file for “waiver extensions” by using the approved form, which is available at http://cciio.cms.gov/resources/other/index.html#alw, and by providing the following information:

1.         Updated contact information, including the name and contact information of the applicant, as well as the name and contact information of the person who prepared the waiver extension request;

2.         Enrollment information for the plan at the time the waiver extension request is sent;

3.         The plan’s current annual limit;

Note that attestations must not be signed by third-party administrators.

4.         An attestation signed by the plan administrator (e.g., the Board of Trustees in a multiemployer plan) certifying that:

a.         the plan or policy was in existence prior to September 23, 2010;

b.         compliance with the annual limit restrictions would result in a “significant decrease in access to benefits” or a “significant increase in premiums;” and

c.         the plan understands and will comply with the requirement to provide the required annual notice to participants and beneficiaries.

The attestation is available at: http://cciio.cms.gov/resources/files/06162011_annual_limit_guidance_2011-2012_final.pdf, and the model language must be followed exactly.

Waiver extension applications must be filed by email no earlier than June 24, 2011 and no later than September 22, 2011.

In addition to the application, plans seeking waiver extensions must re-submit the information described above each of the two remaining calendar years until 2014, no later than December 31, 2012 and December 31, 2013, respectively, without regard to their plan years.  These plans will also be required to retain all records pertaining to the application to permit HHS to conduct an audit of the waiver application.

This waiver program also applies to plans that have not previously received waivers.  In addition to the requirements for waiver extensions noted above, new waiver applicants may submit additional information describing why raising the annual caps to the minimum required levels would result in a significant decrease in access to benefits or a significant increase in premiums.  The application form for new waivers is also available at:  http://cciio.cms.gov/resources/other/index.html#alw.

Revised Notice

The CCIIO has also provided a revised notice that must be sent to all affected participants and beneficiaries annually.  Plans are required to use the language of the model notice.  Any deviation from the model language is prohibited without the written approval of the CCIIO.  Plans are required to display the required language prominently in no less than 14 point font.

Audit

As indicated above, plans that are granted waivers are subject to audit by HHS.  In the event that HHS determines that the waiver application contains material mistakes or omissions, HHS has the authority to withdraw the waiver, which would require the plan to come into full compliance with the restriction on annual caps.

Summary

Plans that need waivers for the remaining period before annual limits are barred entirely must get their applications in no later than September 22, 2011.  Although the applications are not particularly difficult, the procedures must be followed exactly.  This means that the correct forms must be used and transmitted by email in the required format, the attestation must use the model language without deviation and must be signed by an appropriate person, the two annual updates must be timely filed by the end of 2012 and 2013, respectively, and the annual notice must be sent to affected plan participants in the correct form using the model language.  We will continue to monitor the situation and keep you apprised as matters develop.