May 12, 2011
The Honorable Kathleen Sebelius
Secretary of Health and Human Services
U.S. Department of Health and Human Services
200 Independence Avenue, SW
Washington, DC 20201
Dear Secretary Sebelius:
Hundreds of thousands of young adults have joined their parent’s health plan thanks to
the dependent coverage provision in the Affordable Care Act, a critical policy during this
tough economy. However, coverage for many young adults is often stymied by a
regulatory mix-up that necessitates swift clarification. As you know, young adults often
find employment in jobs with very low-quality benefits, or “mini-meds.” These jobs are
often part-time and temporary. The ACA provides that employers do not have to extend
coverage to a young adult dependent if he or she is eligible for his or her own “eligible
employer-sponsored health plan.”1 However, HHS has never officially clarified what
qualifies as an eligible employer-sponsored plan under this provision. As a result of this
lack of clarity, families and employers have been confused as to whether working for an
employer with a mini-med plan, even part-time, could disqualify a young adult from
coverage on their parent’s plan. Indeed, as the Washington Post recently noted in a story
on the issue, “ironically, being offered a job without health insurance is, in this instance,
a good thing.”2
This regulatory confusion creates a disincentive to work by leaving young adults
with a terrible choice: a low-paying job with low-quality health care, or no job with
comprehensive health care. The burden of this choice will fall disproportionately on
low-income young adults who work low-wage jobs to support themselves or put
themselves through school and who already struggle to get access to comprehensive
coverage. Moreover, disqualifying a young adult from comprehensive insurance based
on the offer of a “mini-med” was never the intention of Congress in passing the
Affordable Care Act. As such, we urge HHS to quickly clarify that having an offer of
“mini-med” insurance, or insurance that either receives a waiver or does not meet the
three-year phased approach to annual limits restrictions set out by the Secretary, does not
preclude a young adult from joining a parent’s plan.
Indeed, an analysis of the textual language and intent of Congress reveal that 1) minimeds do not qualify as eligible employer-sponsored coverage under the language of the
1
2
Health Care and Education Affordability Reconciliation Act of 2010 § 2301(a)(4)(B)(ii).
Young Adults Have Additional Options For Health Insurance, Michelle Andrews, Washington Post, May
2, 2010, at http://www.washingtonpost.com/national/health/young-adults-have-additional-options-forhealth-insurance/2011/04/28/AFsQ4FcF_story_1.html. dependent coverage provision, and 2) allowing mini-meds to prevent dependents from
enrolling on their parent’s plan would go beyond the intent of the law and the scope of
the language authorizing the waiver structure.
1. Mini-meds do not qualify as an offer of eligible employer-sponsored coverage for
purposes of the dependent coverage provision.
The Affordable Care Act states that a parent’s employer does not have to extend coverage
to any young adult eligible for their own “eligible employer-sponsored health plan.”3 For
purposes of this section, the act defines an eligible employer-sponsored plan by referring
to the definition provided under the minimum essential coverage section.4 This section,
which discusses what type of group health plans count as minimum essential coverage,
defines an eligible employer-sponsored plan as “a group health plan or group health
insurance coverage offered by an employer to the employee which is ... a governmental
plan ... or coverage offered in the small or large group market within a State...”
It is significant that Congress chose to reference eligible employer-sponsored coverage,
and then specifically group health plans, under the minimum essential coverage
provision. Eligible employer-sponsored coverage is group coverage, that, when required
in 2014, will have no annual limits, an 80 percent medical loss ratio, and will incorporate
the Patient’s Bill of Rights. The dependent coverage section does not use a general
definition of “group market” found elsewhere in the law, which it could easily have done.
The use of the specific term, “eligible employer-sponsored plan” demonstrates an intent
to link dependent coverage to a clearly defined standard and to use only that standard in
determining which offers of coverage can preclude young adults from joining a parent’s
plan. Mini-med plans will not exist in 2014. They are in a distinct class and were never
intended to be considered the type of “eligible employer-sponsored plans” that will count
as minimum essential coverage in 2014. That is why HHS had to create a unique waiver
program to even allow them to continue to exist. Mini-meds therefore do not rise to the
standard required by the dependent coverage provision in order to exclude a young adult
from coverage.
2. The authority for creating annual limit and medical loss ratio waivers does not extend
to precluding young adults from gaining comprehensive coverage.
HHS has issued regulatory guidance around a waiver program that permits certain
features of mini-med plans for a short period of time. That waiver program was justified
under the ACA only so far as it protected individuals with existing coverage from being
denied access to needed services. Allowing plans under the mini-med waiver program to
effectively preclude dependents from getting on a parent’s plan would go against the
stated intention of the program, and beyond the authority found in the ACA to authorize
the program.
3
4
Health Care and Education Affordability Reconciliation Act of 2010 § 2301(a)(4)(B)(ii).
ACA § 1501(b) (inserting § 5000A into the Internal Revenue Code of 1986). ACA Section 5000A(f)(2),
The mini-med guidance relies on section 2711 of the ACA to give the Secretary the
authority to establish a waiver program for complying with annual limits restrictions.5
The interim final regulations provide that the Secretary of HHS may establish a waiver
program for those plans for which compliance with the annual limit restrictions would
result in a significant decrease in access to benefits or a significant premium increase. In
other words, the Departments provided for this waiver in order to prevent the loss of
coverage for enrollees in mini-med plans.
Specifically, the waiver program may be set up “so that individuals with certain
coverage, including coverage under a limited benefit plan or so-called “mini-med” plans,
would not be denied access to needed services or experience more than a minimal impact
on premiums.”6 The guidance creating the program states that “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,” relying
on this reasoning to establish the waiver.7 Further guidance establishes a similar waiver
program for plans with low medical loss ratios, under the authority given to the Secretary
to take into account different types of plans and a concern over the loss of coverage for
mini-med enrollees.8
The statutory authority and ensuing regulatory language allows the Secretary to create a
waiver program that protects the availability of coverage for potential mini-med
enrollees. Limiting young adults from obtaining more comprehensive coverage on
their parent’s plan rather than a mini-med does exactly the opposite; it uses the
mini-med category to deny access to needed services for young adults. In other
words, creating waivers for mini-med plans but then allowing those mini-med plans to
deny young adults more comprehensive coverage would not only go against the stated
intent of the regulatory guidance issued around waivers, but also exceed the authority
under the ACA to establish such a waiver program.
It is clear that Congress did not intend mini-med plans to count as “eligible employersponsored insurance.” It is also clear that the Secretary has no authority to use the minimed waiver program in a way that precludes young adults from joining their parent’s
plan, as that would subvert the whole intent of the program.
As such, we urge you to clarify as soon as possible that the offer of a mini-med plan does
not preclude a young adult from joining a parent’s plan. Given the upcoming graduation
season this issue is of the highest urgency for young adults and their families. Moreover,
5
ACA § 2711; Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions and Patient
Protections Under the Affordable Care Act, 75 Fed. Reg. 37,188 (June 28, 2010) (to be codified 28 C.F.R.
pt. 2590).
6
Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions and Patient Protections Under
the Affordable Care Act, 75 Fed. Reg. 37,188 (June 28, 2010) (to be codified 28 C.F.R. pt. 2590).
7
OCIIO Sub-Regulatory Guidance (OCIIO 2010–1), September 3, 2010.
8
OCIIO Technical Guidance (OCIIO 2010 – 2A): Process for a State to Submit a Request for Adjustment
to the Medical Loss Ratio Standard of PHS Act Section 2718. See also Patient Protection and Affordable
Care Act, Section 2718(c) giving authority to ‘‘take into account the special circumstances of smaller plans,
different types of plans, and newer plans’’ when it comes to enforcing mini-meds.
the clarification would only require a straightforward HHS statement that mini-med
plans, that is, any plan receiving a waiver or not meeting the three-year phased approach
set out by the Secretary, would not qualify as an “eligible employer-sponsored plan” for
purposes of the dependent coverage provision, and therefore would not disqualify a
young adult under 26 from coverage on their parent’s plan.
If you have any questions regarding this issue, please do not hesitate to call at
202.339.9365, or email at [email protected].
Sincerely,
Elizabeth Abbott, NAIC Consumer Representative
Bonnie Burns, NAIC Consumer Representative
Kimberly Calder, NAIC Consumer Representative
Susan Connors, NAIC Consumer Representative
Sabrina Corlette, NAIC Consumer Representative
Stephen Finan, NAIC Consumer Representative
Timothy Jost, NAIC Consumer Representative
Georgia Maheras, NAIC Consumer Representative
Stephanie Mohl, NAIC Consumer Representative
Lynn Quincy, NAIC Consumer Representative
Barbara Rea, NAIC Consumer Representative
Aaron Smith, NAIC Consumer Representative
Barbara Yondorf, NAIC Consumer Representative
Advocates for Youth
American Heart Association
Brain Injury Association of America
Campus Progress
Center for Community Change
Children’s Defense Fund
Community Catalyst
Consumers Union
Families USA
Health Care For All Massachusetts
La Raza
National Asian Pacific American Women's Forum
National Health Law Program
National Partnership for Women and Families
National Women's Law Center
Texans Care For Children
The Children’s Partnership
US PIRG
Young Invincibles