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Despite Exemptions, Coverage Requirements Still Impede Access to Limited Medical Plans

By Stephen Miller  11/9/2010

Nearly 70 percent of U.S. chain restaurant employers indicate that hourly employees are eligible for limited medical plans and that less than 25 percent contribute toward plan costs, according to a 2010 survey by the consultancy Hay Group and the Chain Restaurant Compensation Association (CRCA), a trade association.

A health care reform condition set to be enforced in 2011 will require insurers of these so-called "mini-med" plans to spend 80 to 85 percent of premiums on medical benefits instead of overhead expenses, a limit that CRCA says most plans in the industry do not meet—despite highly publicized temporary waivers given by the U.S. Department of Health and Human Services (HHS) to a number of large restaurant chains (see the SHRM Online article "Waivers of Annual Limits Requirements Defended").

“Limited medical plans offer low-cost coverage to part-time and full-time hourly workers who otherwise might not be able to afford coverage at all. However, employees’ access to limited medical plans may be in danger with health care reform mandates on the horizon, as the coverage is unlikely to meet the minimum standards of acceptable coverage,” said John Hennessy, principal and Western Region benefits practice leader for Hay Group.

Among the findings of a September 2010 Hay Group survey of CRCA members, focusing on health care reform’s impact on the use of limited medical plans:

77 percent of surveyed employers are considering reducing the hours of their hourly workforce to change employees' status from full time to part time in response to reform mandates.

54 percent of employers are considering eliminating limited medical plans for their hourly workforce entirely.

67 percent of employers are still considering making no changes in 2011 and will likely apply for waivers.

While employers that continue to offer these plans can apply for a waiver from the restricted annual limits for the plan year beginning Sept. 23, 2010, there is no guarantee that the waiver process will be extended.

“Eventually, there’s going to be a reckoning,” said Hennessy. “Chain restaurants aren’t in the position to provide comprehensive coverage to their full-time hourly employees at a price employees can afford, and when these requirements set in, thousands may lose access to health insurance coverage entirely.”

Stephen Miller is an online editor/manager for SHRM.

Related ArticleExternal:

New Waiver Requirements for Mini-Med Plan Sponsors, Business Insurance, November 2010

Related ArticlesSHRM:

Waivers of Annual Limits Requirements Defended, SHRM Online Legal Issues, September 2010

Big Changes Ahead for Limited Medical Plans, SHRM Online Benefits Discipline, updated September 2010

Quick Links:

SHRM Online Benefits Discipline

SHRM Online Health Care Reform web page

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