Wednesday, January 30, 2013

MiniMed Maelstrom [UPDATED]

It had appeared that so-called MiniMed (aka "limited benefit") plans would be (for the most part) exempt from ObamaTax requirements. The ObamaTax itself seems to say that, but it's not really that simple (these things rarely are):

"[HHS Secretary Shecantbeserious] said the agency PPACA regulations include a number of rules governing when an indemnity policy included in an employer benefits package falls outside the PPACA framework."

The problem isn't necessarily with the plans themselves, but how they're integrated (or not) with employer-sponsored plans. There must be a fairly visible (if virtual) "wall of separation" between the traditional group plan and any MiniMeds that are purchased, and there have to be completely separate accounting and payroll deduction processes, which of course add to the employer's admin costs.

The plan must also be an indemnity-only configuration; that is, it "must pay a fixed dollar amount per day (or per other period) of hospitalization or illness (for example, $100 per day) regardless of the amount of expenses incurred." The problem comes from whether these benefits are calculated "per claim" or "per period." So, for example, if the plan reimburses $40 for a doctor's office visit, rather than $40 per day that you had medical services performed, there's a problem. Since this describes the bulk of plans that I've seen, this could be a big issue for employers that offer both "regular" and "limited benefit" type plans.

What's not clear to me right now (and I'll update this post as appropriate) is whether these rules apply to plans purchased by individual outside an employer rubric. If so, this could be a real problem for a lot of MiniMed marketers.

UPDATE: Perusing the linked FAQ, I see MiniMeds ("indemnity plans") referenced only in the context of an employer-sponsored plan:

"Fixed indemnity coverage under a group health plan meeting the conditions outlined in the Departments' regulations(3) is an excepted benefit"


"The Departments' regulations provide that a hospital indemnity or other fixed indemnity insurance policy under a group health plan provides excepted benefits" [emphasis added]

By the way, I think this:

"When a policy pays on a per-service basis as opposed to on a per-period basis, it is in practice a form of health coverage instead of an income replacement policy. Accordingly, it does not meet the conditions for excepted benefits."

is pure hokum. In a just world, Ms Shecantbeserious and her minions would find themselves in deep doo-doo for overstepping their regulatory bounds.

Fat chance of that, of course.
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