For many LIUNA health and welfare funds, the restricted annual limits rule of the Patient Protection and Affordable Care Act (PPACA) as amended by the Health Care Reconciliation Act of 2010 is likely to increase the cost of providing health benefits to Laborers and their families. In certain situations, however, the Secretary of Health and Human Services is empowered to grant a waiver of the rule, and the LHSFNA urges LIUNA health and welfare funds to apply.
Because annual limits cap the amount of money that a fund may have to pay for an individual’s care, they were seen as a problem during last year’s debate over health care reform. Nevertheless, as health and welfare fund administrators and trustees understand, these limits serve an important purpose: by providing a clear limit on how much a fund may be required to pay in any given year, they codify the extent of the fund’s risk exposure and, thereby, help contain the cost of providing benefits.
In contrast, without any annual limits, a fund’s potential liability is limitless, and despite the fact that a catastrophic payout is rare, many funds will decide to carry medical stop loss insurance against that possibility. Otherwise, the financial stability of the each fund could be jeopardized. While PPACA does not completely eliminate annual limits until January 1, 2014, it raises the limit in three steps:
- $750,000 for plan or policy years beginning on or after September 23, 2010, but before September 23, 2011
- $1.25 million for plan or policy years beginning on or after September 23, 2011, but before September 23, 2012
- $2.0 million for plan or policy years beginning on or after September 23, 2012 but before January 1, 2014
The government has established a procedure for plans to request waivers of the restricted annual limits rule for plan or policy years through January 1, 2014.
Requests for a waiver must be submitted not less than 30 days before the beginning of a plan or policy year. In addition to required technical information, waiver applications must include a “brief description of why compliance with the interim final regulations would result in a significant decrease in access to benefits for those currently covered by such plans or policies or significant increase in premiums paid by those covered by such plans or policies, along with any supporting documentation” (see OCIIO Sub-Regulatory Guidance: Process for Obtaining Waivers of the Annual Limit Requirements).
The LHSFNA urges health and welfare fund administrators and trustees to work with their consultants and attorneys to apply now for a waiver. A waiver will help ensure that funds are able to continue to provide comprehensive and affordable coverage for their participants and their families.
The LHSFNA’s Health Promotion Division is monitoring PPACA regulatory developments on behalf of LIUNA’s health and welfare funds and is issuing alerts whenever new information becomes available. Concerned funds, local unions and signatory employers can sign up for the alerts by sending an email to email@example.com or by going to the LHSFNA website and requesting a free subscription. Past alert information is compiled on the Health Care Reform Updates page on the LHSFNA website.