Skinny Plans for Over 50 Full Timers?

[Ann H]

Check out a recent blog on theincidentaleconomist.com
Timothy Jost, who is one of the main commenters on healthaffairs.org commented that this loophole of offering a skinny plan along with a fat plan was not available.
Don Levit

That article is about Fixed Indemnity plans, not skinny MEC plans.

By the way, since that date the government has come out with new rules about which Fixed Indemnity plans can be offered alongside medical plans and in what circumstances they can be Fixed Indemnity plans without the "per time period" payment.

 

[Happy Texan]

You are referring to a different blog.
It is recent - the one where the author refers to two different posts by Timothy Jost on healthaffairs.org
Excepted benefits are not considered major medical plans, for their benefits are limited.
Fixed indemnity is merely one of those limited benefit types.
It is a totally different issue from being able to offer a skinny plan in lieu of a penalty.
To be able to do so is clearly discriminatory against the lower paid employees.
Don Levit

 

[Ann H]

You are referring to a different blog.
It is recent - the one where the author refers to two different posts by Timothy Jost on healthaffairs.org
Excepted benefits are not considered major medical plans, for their benefits are limited.
Fixed indemnity is merely one of those limited benefit types.
It is a totally different issue from being able to offer a skinny plan in lieu of a penalty.
To be able to do so is clearly discriminatory against the lower paid employees.
Don Levit

That is the recent blog that I am referring to. I've copied and pasted that blog entry below. It's about Fixed Indemnity mini-meds, not MEC skinny plans, which I said make yesterday's mini-meds look rich. On this thread, we are talking about MEC plans, which is entirely different than the Fixed Indemnity mini-meds that Timothy Jost is referring to.

Timothy Jost, who probably knows the legal quirks of the ACA better than anyone, very helpfully offered some clarifications about how the mini-med loophole works. Below is his email to me (shared with permission).

Large group and self-insured plans are also subject to the lifetime and annual dollar limit cap. They cannot, therefore, legally offer fixed dollar indemnity policies as medical coverage. The WSJ article is wrong on this. Fixed-dollar indemnity plans can be offered as excepted benefit plans as long as payments are based on time periods rather than services. Under recent guidance, fixed dollar indemnity policies can also be offered in addition to comprehensive coverage as excepted benefits. I blogged about this last week at HA. But they cannot be offered alone as minimum essential coverage (and excepted benefits are expressly not MEC).

An employer could offer, that is, a plan that covered preventive services and 2 days of hospital coverage and 5 physician visits and meet the MEC requirement. An employer cannot, however, meet the MEC requirement with a fixed-dollar indemnity policy.

Another issue is the discrimination in favor of highly compensated employee prohibition. The agencies have yet to issue regs on this, but the requirement is in effect. An employer that had all of its executives signed up for Cadillac coverage but its minimum wage employees in mini-meds could conceivably be found to violate that prohibition.

For more detail, you can see Jost's posts describing guidance on fixed dollar indemnity plans over at the Health Affairs blog, here and here.​

 

[houcoogster]

Oh, wow, go figure. I guess I posted on that thread essentially what I just posted on this one. Well, you know the memory is the second thing to go.......

Hey it could be worse......at least you're consistent.

 

[Happy Texan]

Ann
Jost states the skinny plan meets the MEC
This is news to me
Does meeting MEC mean there is no employer penalty for offering a MEC
And this MEC is satisfactory only in large groups
A MEC in small groups and individual is a bronze plan
If so this makes no sense
And why does Jost refer to potential discrimination if a MEC is offered along with a fat plan for higher wage workers
Don Levit

 

[Ann H]

Hi Happy Texan -

To make sense, let's clarify some terminology, because the blog you linked to uses all these terms in it, even though the subject of the blog post is about Fixed Indemnity.

1. Fixed Indemnity (FI) is a style of structuring benefits. Like "copay plan" is a way to structure benefits. Or "Deductible and Co-Insurance only" is a way to structure benefits.

2. Fixed Indemnity means you pay a particular amount for a particular service (like $1000 per day that you are hospitalized, or $50 for a doctor's visit). Hence the name "fixed" because the dollar amount is fixed, and "indemnity" because it's not a reimbursement but rather a payment to the insured. Hospital indemnity is the best known FI plan in recent history.

3. Fixed Indemnity can be paid per service or per time period. In the example above $1000 per day that you are hospitalized is per time period (per day in this case). The other example of $50 for a doctor's visit is per service.

4. ACA outlawed "per service", and said you could only do "per time period" if you wanted it to be an excepted benefit. Excepted benefit means it doesn't have to comply with most other rules of the ACA. For instance short-term plans are most often excepted benefit plans.

5. Very recently the govt said you could offer the "per service" type of Fixed Indemnity only if it was paired with an ACA compliant group plan that didn't limit the EHBs like most fixed indemnity plans do. Before that, they had said you could only offer the "per time period" type.

6. When agents hear "fixed indemnity" they often think of a mini-med, because many mini-meds used the fixed indemnity style of reimbursement. But Fixed Indemnity is not necessarily a mini-med and mini-med is not necessarily a fixed indemnity type. It's just that the last few decades these "mini-meds" or "limited benefit plans" have used the fixed indemnity style of reimbursement. That is one reqson why many DOIs required Fixed Indemnity plans to say "limited benefit plan" clearly on them.

7. Most likely, carriers will use the Fixed Indemnity approach to offer benefits in the new ACA landscape, partly because they are excepted benefits. However, it's probable that the new Fixed Indemnity plans will be beefed up and won't be those trashy plans of yesteryear.

Now, about MEC

1. MEC is not a way to structure benefits. It's a minimum level. So, it doesn't mean fixed indemnity, or copay, or deductible or anything like that. It just means the minimum allowable coverage you can offer and still comply with the ACA. For Individual and Small Group that's bronze level. For large group it's a very, very skinny plan that meets the minimum. Like the poster above said, it could include the EHBs, but really pay out very little.

2. If a large employer wanted to design a very skinny MEC plan, the law actually allows them to offer one so low in benefits that it makes last year's mini-meds look rich.

THAT PARAGRAPH ABOVE IS THE SUBJECT OF THIS THREAD. ^^^

In Timothy Jost's writing, he mentioned the terminology MEC. But his post is really about the Fixed Indemnity style of benefit structure and what you can and cannot do with it.

Also, he mentioned non-discrimination problems. But the non-discrimination rules were delayed until further notice.

 

[Happy Texan]

Ann:
Thanks for your informative reply.
So assume if a large employer offers a skinny MEC, and it is accepted by the employee, they are not available for credits in the Exchange, right?
If they do not accept the MEC, they still are not available for credits in the Exchange, for the employee turned down appreopriate employer-sponsored coverage, assuming it was affordable.
What do you think about the legality of offering solely a skinny MEC versus a skinny MEC, along with a fat plan?
It seems to me for an employer to offer a skinny MEC, he seems to avoid the penalty, but he does not allow the employee the option of going to the Exchanges and receiving subsidies whether the employee accepts or refuses the employer plan.
Don Levit

 

[HealthGuy]

why is the gov't allowing small groups under 50 full timers to have to structure group offerings at a Bronze level but large groups, say (is it 50 or 100) or more have to offer lesser plans with the MEC but they comply? Less benefit rich plans than a bronze level plan, and bigger companies can sneak by the law with this? Makes no sense.

 

[taterpeeler]

Glad I only sell Indy... You group people make my brain hurt

 

[houcoogster]

why is the gov't allowing small groups under 50 full timers to have to structure group offerings at a Bronze level but large groups, say (is it 50 or 100) or more have to offer lesser plans with the MEC but they comply? Less benefit rich plans than a bronze level plan, and bigger companies can sneak by the law with this? Makes no sense.

C*****k, are you that naive? The MONEY in this country calls the shots....that's why the law is what it is.