LITTLE ROCK — Four Arkansas companies, including retailer Dillard’s Inc. and poultry products company O.K. Industries Inc., are among about 1,600 businesses nationwide granted a waiver allowing them until 2014 to keep low annual limits on what they’ll pay for a worker’s health insurance claims.
The overhaul of the U.S. heath-care system is phasing out such restrictions. For plans begun or renewed after Sept. 23, the limit can’t be lower than $1.25 million.
Annual limits will be banned entirely starting in 2014 for almost all health plans, including those that now have the waiver.
Some companies with “mini-med” plans, which offer low premiums and meager benefits, have objected to the new regulations. The median annual limit for such plans is $7,000, according to a survey cited by a Consumers Union report, although some have limits several times higher. About 3.4 million people nationwide are covered by plans that have the waiver.
“Employers and insurers estimated that requiring mini-med plans to comply ... could cause mini-med premiums to increase significantly, forcing employers to drop coverage,” according to the website of the U.S. Center for Consumer Information and Insurance Oversight.
So the U.S. Health and Human Services Department allowed companies to apply for a waiver.
Starting in 2014, people will have better options for coverage, either through their employer or on their own, said Keith Maley, a department spokesman.
The Patient Protection and Affordable Care Act will usher in an array of insurance changes, including a ban on denying coverage because of pre-existing conditions and tax credits for people with low incomes who buy insurance on “exchanges,” online marketplaces.
Julie Bull, spokesman for Little Rock-based Dillard’s, said the waiver allowing the lower annual limits “allows us to continue to provide our associates with a healthcare option that we would otherwise not be able to provide.”
O.K. Industries of Fort Smith and Central Health Corp. in Rogers, which also got a waiver, did not return messages. Industrias Bachoco S.A.B. de C.V., a Mexican poultry producer and processor, said Friday that it has reached an agreement to acquire O.K. Industries.
Herb Martin, risk manager for Central Arkansas Nursing Centers Inc. in Fort Smith, the fourth company with a waiver, said the company’s mini-med plan covers its hourly employees — about 1,000 people, most of them nursing home workers.
Martin said that the limit is “several thousand dollars.” The plan has been offered for about 18 years and is paid for entirely by the company, al- though workers pay to cover dependents.
“It provides coverage for doctor’s office visits, for emergency room visits, that type of thing,” he said. “It’s more adapted to help prevent them from having major illnesses.”
The company sought a waiver because it wanted to maintain the coverage and couldn’t afford a plan without a limit, Martin said.
“We would’ve had to have terminated it, and then there would have been no coverage for them,” Martin said.
Mini-med plans are popular in lower-wage service industries. McDonald’s, Jack in the Box, Cracker Barrel and Waffle House are among companies with the waiver.
Plans approved for the waiver were required to give their members disclosures including illustrations of how the yearly limits would affect a member if he was hospitalized.
The Consumers Union noted that consumers “may not realize that many common medical conditions, such as having a baby (approximately $9,000) or treatment for diabetes ($7,100 per year)” would exceed plans with annual limits of just a few thousand dollars.
“A more serious illness, such as a heart attack, could leave the enrollee with bills exceeding $75,000,” the organization said.
Bull said the Dillard’s plan is one of several choices for health coverage and can be used by employees in the company’s stores and at the corporate level.
“Anyone can access that if they want to ... if they’re eligible to participate in the health-care plan in the first place,” she said.
Some plans were denied a waiver because they couldn’t show their premiums would increase or that benefits would decrease if they weren’t exempted.
All group plans that were formed after the passage of the Affordable Care Act — and all plans that existed before the law but did not receive the waiver — face the restrictions on annual limits.
Also facing restrictions on annual limits are all new health plans bought by individuals.
While individual policies that existed before the law was passed do not face restrictions, the Health and Human Services Department says that will become an extremely small segment of the market because of the high frequency at which people drop individual plans.
Martin, the risk manager for Central Arkansas Nursing Centers, said he didn’t know how the company will adapt once the waiver ends in 2014.
The company might not have a plan or choose a different plan, or employees might participate in a government plan, he said.
“We don’t know at this point what the rules are going to be exactly,” he said.
Business, Pages 77 on 10/30/2011