CMS' Center for Consumer Information and Insurance Oversight has offered additional guidance on health reimbursement arrangements, saying that sponsors of stand-alone HRAs are exempt from having to apply individually for federal waivers on restrictions to annual benefits.
Agency offers guidance on HRAs, waivers
The CMS describes an HRA as a self-insured medical reimbursement plan funded solely by employer contributions and not through salary reduction. This type of plan reimburses medical-care expenses of participating employees, spouses and dependents to a maximum dollar amount for a coverage period. And it also allows participants to carry forward any unused amounts at the end of a coverage period.
Issued late last week, the exemption applies to all stand-alone HRAs—meaning those not integrated with another health plan—that were effective before Sept. 23, 2010, which essentially means those sponsors will not have to seek waivers from the annual minimum dollar limit on how much plan a must cover. Last year's health reform law generally prohibited group health plans and health insurance issuers offering group or individual health insurance coverage from imposing lifetime or annual limits on the dollar value of essential health benefits, for plan years beginning before Jan. 1, 2014. According to HHS, most plans began phasing out their annual limits in September 2010. Many Americans are now in plans that can't impose annual limits below $750,000 for 2011. That threshold will increase to $1.25 million in 2012 and $2 million in 2013. Earlier, an interim final rule said HRAs that were integrated with other health coverage were exempt from having to seek waivers, so this guidance adds free-standing arrangements to the group, effectively applying to all HRAs.
“All HRAs set limits on the amount that can be spent, and, we believe, those limits would always be less than the applicable restricted annual limit amounts,” the agency announced in an insurance standards bulletin (PDF). It continued by saying that applying the restrictions to annual limits to HRAs would result in a “significant decrease in access to HRA benefits.”
Separately, the Center for Consumer Information and Insurance Oversight reported that as of July 2011, a total of 1,472 one-year waivers and 106 three-year waivers have been granted to health plans. “The number of enrollees in plans with annual limits waivers is 3.4 million, representing only about 2% of all Americans who have private health insurance today,” the agency noted.
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