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    NACS Clarifies What McDonald's Health Care Exemption Means

    Companies may continue to offer mini-med plans to part-time employees.

    WASHINGTON, D.C. -- Health and Human Services (HHS) Secretary Kathleen Sebelius recently issued an exemption to McDonald's and 29 other companies and unions from an annual limit provision in the new health care law. Reports of the exemption raised concern among convenience store owners that the large fast-food company and others were receiving some kind of special treatment from the government at a time when small businesses face potential new increases in their health care costs due to the new law.

    On Friday, NACS attempted to clarify the issue for its members. "In simple terms these companies and unions applied for and received a waiver that would allow them to continue offering 'limited benefit plans' to their part-time, seasonal and temporary employees. The waiver is for one year and only waives the portion of the law that phases out annual limits. Waivers must be applied for each year until 2014 when the new health care exchanges are set up and these employers and workers will have other insurance options," said NACS, in its Washington report.

    Mini-med plans provide limited coverage at minimal employee cost. These plans often set annual maximums as low as $2,000 per year. But they are inexpensive and better than no insurance to many employees. Without the waivers from HHS, the companies would have had to provide a minimum of $750,000 in coverage to their employees next year, increasing to $1.25 million in 2012, $2 million in 2013, and unlimited in 2014. HHS said it granted the waivers in late September so workers with such plans wouldn't lose coverage from employers who might choose instead to stop health insurance altogether.

    If the annual limit provision set forth in the Patient Protection and Affordable Care Act (PPACA) was applied to these plans as it was supposed to be on September 23, 2010 they would cease to exist, and close to 1.5 million people would lose the little insurance that they have, reported NACS.

    The law gives the secretary of HHS the authority to waive these annual limit requirements if it is determined that the regulations would result in a significant decrease in access to benefits or a significant increase in premiums.

    "It is an unfortunate consequence of a poorly written and not completely thought out law," said NACS. "Mini med plans should have been dealt with before the law was passed. Seeing that close to 1.5 million people would lose their mini med coverage if the requirements were applied to these plans HHS decided to offer a waiver process for the companies that utilize these plans."

    The association added that a group health plan or health insurance issuer may apply for a waiver if coverage was offered before September 23, 2010 by submitting a waiver not less than 30 days before the beginning of the plan. The application must include:

    • the terms of the plan for which the waiver is sought
    • the number of individuals covered
    • the annual limits and rates applicable to the plan
    • a description of why compliance will cause an increase in the premium for the plan or a decrease in access to the plan
    • certification from the CEO of the issuer of the plan that premiums would increase or coverage would decrease

    No deadline to apply has technically passed. The deadline all depends on the start date of each individual plan.

    Mini med plans are much more common amongst the restaurant industry, big box retailers and unions than they are in the convenience store industry. "Not many of our members offer health care insurance to their part time employees," said NACS.

    "In this instance the Obama administration is following the letter of the law and these waivers were rightfully granted. Are mini med plans the best in insurance coverage? No. Is this a political maneuver right before the election that makes the Obama administration look good? Maybe, 1 million people did just get to keep their insurance that was in danger of being dropped. Should you be mad about this exemption that allows mini med plans to continue to be offered? Probably not. There are a lot of other things in this law to mad about," NACS said.

    It's important to note, according to NACS, that these companies that received the exemption for their limited benefits plans are not exempt from the employer mandate in the new law.

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