Agents and brokers marketing limited medical plans, which will undergo “major changes” with the new health care reform law, should be looking ahead at how those changes will affect their clients, according to an industry expert.
Brokers who market limited medical plans – or have customers utilizing limited medical plans – should contact their carriers immediately to find out their product strategy as a result of health care reform, Conkling said.
“They should ask ‘How will health care reform affect renewals? Are you still accepting new business?’ If the carrier can’t give you straight answers, find a new limited medical partner who can,” he said.
Among the changes will be that coinsurance-based expenses incurred by limited medical plans will be subject to new rules, Conkling said.
Employers using limited medical plans, also known as limited benefit plans or mini-meds, will experience changes starting Sept. 24, when grandfathered health insurance plans begin to renew. Group health plans, even those that have been grandfathered, will have to meet new requirements, including no lifetime and annual limits.
All limited medical plans that were considered “group health insurance plans,” plans that issued Letters of Creditable Coverage under HIPAA, and plans identified as Limited Major Medical Plans that function similarly to traditional group plans with co-pays, deductibles, co-insurance and an annual overall maximum or a separate inpatient/outpatient maximum will be subject to these new regulations starting Sept. 23, Conkling said.
Within the limited medical industry, there are two styles of limited medical benefit plans: coinsurance (sometimes referred to as co-pay based or expense incurred) and indemnity-based (sometimes called fixed indemnity) insurance.
Fixed indemnity style limited medical plans that do not issue creditable coverage letters or represent themselves as a “true group health insurance plan” are exempt from the new regulations because they are filed as supplemental and not subject to these new regulations, as opposed to the coinsurance-based limited medical plans, which are, according to Conkling.
He added that employer groups renewing after Sept. 23 may find their carrier will not renew the plan because it cannot meet the new rules. They also may experience significant rate increases or have to move to a fixed indemnity-style limited medical plan.