1389 BROAD STREET, CL.IFTON. N. J. 07013 TELEPHONE 973 7795800 FAX 973 7781725 EMPLOYER TRUSTEES EMPLOYEE TRUSTEES RICHARD E. McFEELEY. STOP a SHOP ADMINISTRATOR FRANK M. VACCARO HARVEY WHILLE KATHY RUSSELLO. STOP a SHOP MATTHEW MOLINARO GAIL JORDAN. STOP a SHOP WILLIAM ROVENSKY October 29, 2010 By Overnight Courier and E-Mail Mr. James Mayhew Department of Health and Human Services Office of Consumer Information, and Insurance Oversight Office of Oversight Room 737-F-04 200 Independence Ave., SW Washington, DC 20201 Re: HHS Waiver of Restricted Annual Limits UFCW local 1262 and Employers Health and Welfare Fund Dear Mr. Mayhew: The Department of Health and Human Services ("HHS"), Department of Labor, and Department of Treasury (the "Agencies") issued interim final regulations implementing the prohibition of lifetime limits on essential health benefits and establishing until 2014, the restricted annual limits on essential health benefits as required under the Patient Protection and Affordable Care Act ("PPACA"). 75 Fed. Reg. 37188 (June'28, 2010) (the "Rule"). Although the Rule permits restricted annual limits on essentia.l health benefits for plan years beginning before January 1, 2014, the Rule as written would prevent employers from offering most limited benefit plans of the type that are routinely offered to part-time, temporary and seasonal employees. The UFCW Local 1262 and Employers Health and Welfare Fund ("Fund") is a Multiemployer Benefit Fund that provides medical, prescription, dental and vision benefits to more than full and part-time participants throughout New Jersey and New York. In addition, its allied Funds offer pension and legal benefits to these same participants. Our participating employers range from the operators of chain and independent supermarkets to Local 1262, as well as the noted Multiemployer Funds. Benefits are provided under self-funded multiemployer plans pursuant to the terms of collective bargaining agreements negotiated between the union and the participating employers. These benefits are typically provided to part-time employees after they undergo a collectively bargained waiting period based on length of service, with benefits becoming increasingly generous as employees achieve tenure. 1 Ex. 4 UFCW L1262:000001 C o m p l e t e C o l o r a d o . c o m The UFCW Local 1262 and Employers Health and Welfare Fund is proud to be among the Benefits Funds that provide, and whose contributing employers pay for, quality, affordable health benefits. The majority of the part-time plan participants are employed in the supermarket industry which operates on a profit margin, where benefits are self-funded, and with the contributing employers operating under previously-negotiated collective bargaining agreements. Because we have a varied workforce, our plan offers varied benefits, including lifetime limits established for part-time participant coverage. Faced with the PPACA-mandated elimination of these lifetime limits, coupled with the absence of an aggregate annual limit, the Trustees of the UFCW Local 1262 and Employers Health and Welfare Fund were concerned about the potential financial impact. One approach to offsetting the cost of uncapped coverage was to convert (as permitted under PPACA) the existing $ lifetime limit in the Medical Plan to an annual limit of the same amount. A potential obstacle to this approach was the Rule imposed $750,000 restricted annual limit. Our consultants project that complying with this $750,000 annual limit vs. implementing the $ annual limit would significantly increase the costs of providing health benefits to the part-time participants, necessitated this waiver application. Unless our waiver application is approved so as to allow our Fund to establish annual dollar limits for part-time participants that are lower than the restricted annual limit set forth in the Rule, the contributing employers have informed the Fund that they will have no choice but to bargain to cease employer-paid coverage for their part-time workers who currently receive such coverage, or be forced to layoff a significant number of employees, thereby exacerbating the job losses our country is witnessing. We are convinced that Congress and the Administration did not intend for businesses that are already doing the right thing by funding health benefits for part-time employees to be prevented from continuing to do so. But that will be the result, certainly for our Fund, if we are not granted some relief from the annual limits now applicable under the Rule, which limits are two times greater than the Trustee opted for $ annual limit - derived from the lifetime limits pursuant to which our Fund has been able to provide coverage to part-time employees of our contributing employers. The Fund is not requesting a waiver with respect to any of the coverage it provides to the full-time employees of its contributing employers. In accordance with the instructions which have been issued by HHS relative to group health plans applying for "a waiver from the restricted annual limits," we have responded to the requested information as follows: 1. The terms of the plan or policy formes) for which a waiver is sought; We have included the appropriate sections of the Summary Plan Description covering part-time participants of the Fund and all relevant Summary of Material Modifications issued since the Summary Plan Description was prepared. 2 Ex. 4 Ex. 4 Ex. 4 Ex. 4 UFCW L1262:000002 C o m p l e t e C o l o r a d o . c o m 2. The number of individuals covered by the plan or policy form(s) submitted; There are approximately part-time participants covered by the Medical Plan. Of that number, approximately are covered by the inpatient hospitalization benefit. 3. The annuallimit(s) and rates applicable tothe plan or policy form(s) submitted; The $ lifetime limits applicable to part-time participants in the Plan are detailed in the attached Summary Plan Description and Summary of Material Modifications. The intent of this waiver application is to convert this $ lifetime limit to an aggregate $ annual limit. The current rate (applicable cost) for the Plan, which provides medical and prescription coverage as noted in number two above, is approximately $ per month per part-time participant. These costs do not include the other benefits, i.e., dental, vision, etc., which are provided under this Plan to part-time participants. The Plan is non-contributory, in that participants do not incur any premium charges; participants contribute to the cost of their coverage only through co insurance, co-payments and deductibles. 4. A brief description of why compliance with the interim final regulations would result in a significant decrease in access to benefits for those currently covered by such plan or policies, or significant increase in premiums paid by those covered by such plans or poiicies, along with any supporting' documentation; and The participating employers have become very vocal in telling us that they cannot afford the enormous increase in health benefit costs that complying with the restricted annual limit rule for part-time employees will impose. Absent relief through the waiver program, they are telling us they cannot continue to provide and pay for these benefits without significant job losses. In the discussion of the waiver program in the Preamble to the ~ u l e , the Agencies appear to focus on insured limited benefit plans (for example, so called "mini-med" plans). That said, the employers that contribute to self-funded group health plans are faced with the same, if not more challenging 'decisions. The numerous collective bargaining agreements ("CBAs") that related to the health benefits we offer are continuously being renegotiated as agreements expire in 2010, 2011, and thereafter. A typical plan provides multiple options and most are self-funded. Representatives of the union and the contributing employers typically negotiate a "wage package" in the collective bargaining process that, among other things, consists of hourly wage, health and welfare, and pension components. The contribution rates to self-funded, multiemployer group health plans specified in the wage package and the benefit levels those contribution rates fund, are the product of intense negotiations between the bargainir:-g parties and effectively establish the maximum 3 Ex. 4 Ex. 4 Ex. 4 Ex. 4 Ex. 4 Ex. 4 UFCW L1262:000003 C o m p l e t e C o l o r a d o . c o m benefit levels that the parties believe are affordable given the wage, pension and other obligations that must be covered by the wage package. Applying the coverage mandates to the coverage that the Fund provides to part-time workers unaer the collective bargaining agreements ,will dramatically increase health care costs to an unaffordable level and strain labor-management relations. The waiver program should take account of the conclusions of the bargaining parties as to the benefit levels that are affordable under the wage package - as well as the fact that the immediate effective date of the new restrictions does not give the parties adequate
" time to make any to the wage package allocations - by" permitting this Plan to impose an annual benefit limit for the Plan Year beginning December 1, 2010 and ending November 30, 2011 that is not less that the Medical Plan's current lifetime limit, i.e., $ Based upon the report of the Fund's actuarial consultant, the projected annual increase relative to increasing the part-time $ annual maximum (converted from :the existing $ lifetime maximum) to $750,000 per year effective December 1, 2010, would be $ per year. This is approximately $ per part-time participant per month eligible for the Medical Plan, which includes hospitalization. The $ would increase the per participant per month cost from the $ noted above to $ approximately a % increase. 5. An attestation, signed by the plan administrator or Chief Executive Officer of the issuer of the coverage, certifying 1) that the plan was in force prior to September 23, 2010; and 2) that the application of restricted annual limits to such plans or policies would result in a significant decrease in access to benefits for those currently covered by such plans or policies, or a significant increase in premiums paid by those covered by such plans or policies. Attestation: The Plan was in force prior to September 23, 2010. The application of restriCted annual limits will result in a significant decrease in access to benefits.
Frank M. Vaccaro Plan Administrator 4 Ex. 4 Ex. 4 Ex. 4 Ex. 4 Ex. 4 Ex. 4 Ex. 4 Ex. 4 Ex. 4 UFCW L1262:000004 C o m p l e t e C o l o r a d o . c o m Pages :5 through 107 redacted for the following reasons: Exemption 4: mfomlation that would not customarily be made public by the suhmitter. UFCW L1262:000005 C o m p l e t e C o l o r a d o . c o m DEPAR1MENT OF HEALTH & HUMAN SERVICES of Consumer IrffoiTOationanc:f . .Insurcmc;;e Oversight Washington. Dc 20201 October 2010. ... . From: SUbject: Application for W trlyer of .the Anriual Limits Requirements of PHS Act Section 2111 <. . Waiver Applicant: . Section 271 1(8,:)(2) ofthe Ptiblic Health by.the Pfitlent Ptotecti(1)and Atrordrl.ble C4teAct (Affo:rdaple Care Seoretary toirnpose restrictions on the imposition liIi1its. on the dollar value ofessential.healthbenefits (as detineq.ih section1302(b):ofthe Act) for tUlYpa,mc.lPflot ot.bene:l:iciaryin anew .. in the,fn4ividual-fuarket for plap.ofP91icyyea,ts ., l)eginnlng on 23,. " granted the whatconstii9tes at1nlfallimit" that can still be i:mp6se4undetsuclip1ans o,t polici(:spriottq JanUary 1,2014. , ( , . ..... l . Theinteriinfirut.l regtilatiotl$ published ott 28,i2QIO at 26CPR. 5.4.9815-2119T; 29 CFR and 4.5'CF:R147 resttictedannua11itfi.its.The prQvided tluii these annua1limits may be waived by the :Sectetary Qf Health andlrummt Services (HlfS)ifoompUartce wit;lUhemterim tmah:egtilationsw()u.1d resUlt in asignifitaritdecrease in,aCc'Css to henefitsQr a'significant increase in preIIliums. P\lfSUfttit to thetegulation.HHS issued guidance Qll September3 regarding the scope and proCess for . , applying for a waiver. . . , . . . ".; . ., . .,. J ' . ,,'. ,. ,. The Office of Consumer InfQrmation and Ins,urance Oversight, Office of Insurance Oversjght receivooand processed your fipplication for the plan(s) orpolicy(ies) year beginning January 1, 2011. We your application ha.s met theCtiteria to obtain a waiver of the restricted. anntiallirnits. requirements because compliance with the interim final regulations . wO\1ld result in a siguificantdecrcase in to benefits for those currently covered by such .plans or policies. or a signifiqmt increas.e in premiums paid by those covered by such plans or ' policies..To the extent you make;: any change to your bene,fit package after March 23. 2010, you ' must detennine whether'the change(s) will trigger loss of'grandfathe,ring status pursuant to 45 JCFR 147.140(g)(1).' An approva.I of your request for waiver of the restrict<;<i annualliIIlits requiiemetits granted under . this process applies only to the atmuallimit(s) provided in your application for-the plan or policy \' , year beginning hetw.een SeptelIlqer 2010 and September 2;3,201 L. This waiver only applies to theaIitluallimits requirements In Section 4711 of the ACA and does not apply to any other requirement of the Affordable Care Act, ,ER.ISA. the iRS Code, or. the PHS Act., Further. agtoup 1 UFCW L1262:000006 C o m p l e t e C o l o r a d o . c o m " ,heaithplan reapPly fOr any subsequent plan orp<>1icy ye1\tpl'ior ., ,::to January!, 20f4wbel,l withfutitre guidanceftQtnijH.S;: .. '-: .. add,()therte1eva11tinf(lrriiatiQu. :.. I: If you have this}etter. eJUQit; I... ..,' ,J: ,: :: . Ii . .. \' , . . .- ., '" .,',; 11 ," I, , ) \ .. " UFCW L1262:000007 C o m p l e t e C o l o r a d o . c o m From: Kottenmeier, Erika (HHS/OCIIO) Sent: Thursday, December 02,2010 4:09 PM To: Habit, Sandra (HHS/OCIIO) Subject: FW: Annual Limits Waiver application This is the plan administrator from Local 1262 and Employers Health & Welfare Plan. I've been trying to catch up on my correspondence with contacts today and forgetting to loop you, so I'm going to have to forward you a bunch of emails soon. Apologies in advance! From: Kottenmeier, Erika (HHS/OCIIO) Sent: Thursday, December 02, 2010 3:54 PM To: 'fmv@tsonline.com' Subject: Annual Limits Waiver application Dear Mr. Vaccaro, Thank you for your inquiry. We have received your application and are currently processing it. We will present our recommendation to HHS leadership our next opportunity. We apologize for the delay, which was caused by the high volume of applications. Kind Regards, Erika M. Kottenmeier Division of Enforcement Office of Oversight HHS/OCIIO erika,koUenmejer@hhs.gov INFORMATION NOT RELEASABLE TO THE PUBLIC UNLESS AUTHORIZED BY LAW: 'Illis information has not been publicly disclosed and may be privileged and confidenti"L It is for internal government use only ,1l1d must not be disseminated, distributed. or copied to persons not authorized to receive the information. Unauthorized disclosure may result in prosecution to the full extent of the law. file:lIlTl/...20Einployers%20Health%20&%20Welfare%20Fund%20%20(1 0-29)lRequest%20for%20additional%20%20info%20 12.2.10 .htm[07/26/201 1 3 :09:51 PM] UFCW L1262:000008 C o m p l e t e C o l o r a d o . c o m From: Kottenmeier, Erika (HHS/OCIIO) Sent: Thursday, December 02, 20104:45 PM To: 'fmv@tsonline.com' Cc: Pham, Erica (HHS/OCIIO); Habit, Sandra (HHS/OCIIO) Subject: Annual Limits Waiver application Dear Mr. Vaccaro. In order to complete processing your waiver application there are two items of information we still require: first, is your plan a " grandfathered plan (was it in existence prior to March 23, 2010) and do you expect it will maintain grandfathered status in this next, plan year, and second, what is the date on which the last collective bargaining agreement pursuant to which this plan was negotiated will expire? Kind Regards, Erika M. Kottenmeier Division of Enforcement Office of Oversight HHS/OCIIO erika.kottenmeier@hhs,gov INFORMATION NOT RELEASABLE TO THE PUBLIC UNLESS AUTHORIZED BY LAW: TIlis in.rormation has not been publicly disclosed and may be privileged and confidential. It is for internal government use and must not be disseminated, distlibuted. or copied to persons not authorized to receive the information. Unauthorized disclosure may result in prosecution to the full extent t)f the law. - ,II file:!1ITI/ ... 201262%20and%20Empioyers%20Health%20&%20Welfare%20Fund%20%20( 10-29)/Request%20for%20info%20 12.2. I 0.htm[07 126/2011 3 :09:52 PM] UFCW L1262:000009 C o m p l e t e C o l o r a d o . c o m From: Frank M. Vaccaro [fmv@tsonline.com] Sent: Friday, December 03,2010 9:57 AM To: Kottenmeier, Erika (RRS/OenQ) Cc: Pham, Erica (RRS/OenO); Rabit, Sandra (RRS/OeIlO) Snbject: RE: Annual Limits Waiver application Dear Ms. Kottenmeier, Thank you for your email. I will respond with the requested information, relative to the UFCW Local 1262 Health and Welfare Fund, before the end of the day today. Sincerely. Frank M. Vaccaro _._----_..._.._---_._-_. From: Kottenmeier, Erika (HHS/OCIIO) [mailto:Erika.Kottenmeier@hhs.gov] Sent: Thursday, December 02, 2010 4:45 PM To: Frank M. Vaccaro Cc: Pham, Erica (HHS/OCIIO); Habit, Sandra (HHS/OCIIO) Subject: Annual Limits Waiver application Dear Mr. Vaccaro, In order to complete processing your waiver application there are two items of information we still require: first, is your plan a grandfathered plan (was it in existence prior to March 23, 2010) and do you expect it will maintain grandfathered status in this next plan year, and second, what is the date on which the last collective bargaining agreement pursuant to which this plan was negotiated will expire? Kind Regards, Erika M. Kottenmeier Division of Enforcement Office of Oversight HHS/OCIIO erika.kottenmeier@hhs gOY INFORMATION NOT RELEASABLE TO THE PUBLIC UNLESS AUTHORIZED BY LAW: 111i5 informahon has nut been publicly disclused and may be privileged and confidentiaL It is for internal government use only and must not be disseminated, distributed, or copied to persons not authorized to receive the information. Unauthorized disclOi;ure may result in prosecution to !lw full extent of the law. file:!!ITII...and%20Employers%20Health%20&%20Welfare%20Fund%20%20(10-29)!Request%20for''1020info%20response%20 12.3.1 O.htm[07126!20 11 3 :09: 52 PM] ~ - ~ - - UFCW L1262:000010 C o m p l e t e C o l o r a d o . c o m From: Frank M. Vaccaro [fmv@tsonline.com] Sent: Monday, December 06,2010 3:09 PM To: Kottenmeier, Erika (HHS/OCIIO) Cc: Pham, Erica (HHS/OCIIO); Habit, Sandra (HHS/OCIIO) Subject: RE: Annual Limits Waiver Application - UFCW Local 1262 Health and Welfare Fund Importance: High Dear Ms. Kottenmeier, With respect to your questions regarding the above captioned Fund, please be advised as follows. 1. The Plan is a Grandfathered Plan and we expect it will maintain Grandfathered status in this next Plan year. the last collective bargaining agreement pursuant to which this plan was negotiated will expire" on 2. Please let me know if I may be of any further assistance. Sincerely. Frank M. Vaccaro From: Kottenmeier, Erika (HHS/OCIIO) [mailto:Erika.Kottenmeier@hhs.gov] Sent: Thursday, December 02, 2010 4:45 PM To: Frank M. Vaccaro Cc: Pham, Erica (HHS/OCIIO); Habit, Sandra (HHS/OCIIO) Subject: Annual Limits Waiver application Dear Mr. Vaccaro, In order to complete processing your waiver application there are two items of information we still require: first, is your plan a grandfathered plan (was it in existence prior to March 23, 2010) and do you expect it will maintain grandfathered status in this next plan year, and second. what is the date on which the last collective bargaining agreement pursuant to which this plan was negotiated will expire? Kind Regards, Erika M. Kottenmeier Division of Enforcement Office of Oversight HHS/OCIIO erika.kottenmeier@hhs.gov INFORMATION NOT RELEASABLE TO THE PUBLIC UNLESS AUTHOlUZED BY LAW: This information has not been pubHcly disclosed ,md may be privileged and confidential. It is for internal government use only and must 110t be disseminated, distributed, or copied to persons not authorized to receive the information. Unauthorized disclosure may result in prosecution tn the tull extent of the law. file:!IITI/ ... and%20Employers%20Health%20&%20Welfare%20Fund%20%20( 1 0-29)/Request%20for%20info%20response%20 12.6.1O.htm[07/26/20 11 3 :09 :53 PM] UFCW L1262:000011 C o m p l e t e C o l o r a d o . c o m From: Botwinick, Alexandra (HHS/OCIIO) Sent: Tuesday, December 14,201012:02 PM To: 'fmv@tsonline.com' Subject: Waiver of the Annual Limits Requirements of PHS Act Section 2711 Importance: High Follow Up Flag: Follow up Flag Status: Red Attachments: Updated Jan 1 Approval Letter .pdf Good Afternoon, Thank you for submitting an application for a Waiver of the Annual Limits Requirements of the PHS Act Section 2711 for UFCW Local 1262 and Employers. HHS has reviewed your application and made its determination. Please see the attached letter. Please confirm receipt of this letter by replying to this e-mail. Please let me know if I can be of further assistance. Sincerely, Alexandra Botwinick Office of Oversight HHSjOCIIO alexandra.bQtwinick@hhs.Qoy file:II/TI/ ... 20and%20Employers%20Health%20&%20Welfare%20Fund%20%20( 1 0-29)/W aiver''1020Approval%20Sent%20 12-14-201 0.htm[07/26/20 II 3 :09:53 PM] UFCW L1262:000012 C o m p l e t e C o l o r a d o . c o m From: Botwinick, Alexandra (HHS/OCIIO) Sent: Tuesday, December 14,2010 12:02 PM To: 'fmv@tsonline.com' Subject: Waiver of the Annual Limits Requirements of PHS Act Section 2711 Importance: High Attachments: Updated Jan 1 Approval Letter .pdf Good Afternoon, Thankyou for submitting an application for a Waiver of the Annual Limits Requirements of the PHS Act Section 2711 for UFCW Local 1262 and Employers. HHS has reviewed your application and made its determination. Please see the attached letter. Please confirm receipt of this letter by replying to this e-mail. Please let me know if I can be of further assistance. Sincerely, Alexandra Botwinick Office of Oversight HHSjOCIIO alexandra.botwinick@hhs.gov file:///TI/ ... W%20Local%20 1262%20and%20Employers%20Health%20&%20Welfare%20Fund%20%20( 1 0-29)/ Approval%20 12.14.1 0.htm[07/26/20 11 3:09:54 PM] UFCW L1262:000013 C o m p l e t e C o l o r a d o . c o m