The U.S. Department of Health and Human Services (HHS) has issued guidance on the process for health plans to obtain waivers of the annual limit requirements under the Affordable Care Act (PPACA).

The Affordable Care Act restricts the use of annual limits in health plans. Generally, plans issued or renewed beginning September 23, 2010, will be allowed to set annual limits no lower than $750,000. This minimum limit will be raised to $1.25 million beginning September 23, 2011, and to $2 million beginning on September 23, 2012. Beginning in 2014, plans may not impose annual limits on coverage.

However, the law recognizes that a class of group health plans and health insurance coverage, generally known as 'limited benefit' plans or 'mini med' plans, often has annual limits well below the restricted annual limits set out in interim final regulations. These group plans and health insurance coverage often offer lower-cost coverage to part-time workers, seasonal workers, and volunteers who otherwise may not be able to afford coverage at all. In order to ensure that individuals with certain coverage, including coverage under limited benefit or mini-med plans, would not be denied access to needed services or experience more than a minimal impact on premiums, the interim final regulations contemplated a waiver process for plan or policy years beginning prior to January 1, 2014 for cases in which compliance with the restricted annual limit provisions of the interim final regulations 'would result in a significant decrease in access to benefits' or 'would significantly increase premiums.'

A group health plan or health insurance issuer may apply for a waiver from the restricted annual limits if the plan or the coverage offered by the issuer was offered prior to September 23, 2010 for the plan or policy year beginning between September 23, 2010 and September 23, 2011.

Plans must submit an application not less than 30 days before the beginning of the plan or policy year, or in the case of a plan or policy year that begins before November 2, 2010 not less than 10 days before the beginning of such plan or policy year.

To view the complete requirements for the waiver application, please see the guidance here.

“Limited Benefit Plans May Apply for Waivers of Annual Limit Rules Prior to New Plan Year” October 2010 <HR and Benefits Essentials Newsletter> (October 2010)