The Patient Protection and Affordable Care Act (Affordable Care Act), requires the Secretary of Health and Human Services (HHS) to impose restrictions on the imposition of annual limits on the dollar value of essential health benefits in a new or existing group health plan for plan years beginning on or after September 23, 2010 and prior to January 1, 2014. Interim final regulations published on June 28, 2010, established these restricted annual limits, along with the possibility for a waiver from these restricted annual limits as granted by HHS if complying with the interim final regulations would result in a significant decrease in access to benefits or a significant increase in premiums.


On September 3, 2010, HHS provided some initial guidance on the waiver process.  On November 5, 2010, HHS updated that guidance, the provisions of which applicable to group health plans are summarized below. Plans seeking a waiver should be sure to make their best case and, if granted, implement as appropriate.


Notice Requirement. As a condition of receiving a waiver of the annual limits requirements, group health plans must notify each participant that the plan does not meet the restricted annual limits for essential benefits set forth in the interim regulations due to the waiver obtained by the plan. Notice requirements: 

·        Include the dollar amount of the annual limit along with a description of the plan benefits to which it applies.

·        Prominently display the notice in clear, conspicuous 14-point bold type.

·        State the waiver applies for only one year.

·        HHS will soon be issuing a model notice language for health insurance issuers which will be posted on the website in the near future at:


Factors Considered. HHS has stated that all applications will be reviewed on a case-by-case basis. However, the Bulletin lists several factors that may be considered as each application is reviewed to determine whether compliance with the interim regulations would result in a “significant decrease in access to benefits” or a “significant increase in premiums.” The Bulletin sets out the following factors:


  • The application’s explanation as to how compliance with the restriction on annual limits would result in a significant decrease in access to benefits.
  • The policy’s current annual limits. Higher annual limits would be more likely to experience lower premium increases to comply with the restricted annual limit requirement than plans with lower limits.
  • The change in premium in percentage terms. The lower the percentage increase to comply, the less likely compliance with the restricted annual limit requirement would be found to be “significant.”
  • The change in premium in absolute dollar terms. A large percentage increase may only translate to a small increase in absolute dollar terms and therefore may not be “significant.”
  • The number and type of benefits affected by the annual limit. Some policies have limits on only some essential health benefits, such as prescription drugs, and may not significantly increase the overall cost of health insurance for enrollees.
  • The number of enrollees under the plan seeking the waiver.  

Mini-Med Policies and Medical Loss Ratio Requirement.  Because the premium and cost structure of mini-med policies create significant challenges for those plans in regard to satisfying the medical loss ratio requirements, expect to see medical loss ration regulations addressing, among other things, a special methodology that takes into account the special circumstances of mini-med plans in determining how administrative costs are calculated for medical loss ratio purposes.


Record Retention and Audits. As a condition for obtaining a waiver, HHS retains audit authority over applicants. In the event of an audit, if it is determined that the data submitted to HHS in support of a waiver contain material mistakes or omissions, HHS may in its discretion deny future waiver requests.

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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.