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UFCW LOCAL 1262 AND EMPLOYERS

HEALTH AND WELFARE FUND


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
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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
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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
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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
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Ex. 4
Ex. 4
Ex. 4
Ex. 4 Ex. 4
Ex. 4
UFCW L1262:000004
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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
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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
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" ,heaithplan reapPly fOr any subsequent plan orp<>1icy ye1\tpl'ior .,
,::to January!, 20f4wbel,l withfutitre guidanceftQtnijH.S;: ..
'-: ..
add,()therte1eva11tinf(lrriiatiQu. :..
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If you have this}etter. eJUQit;
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UFCW L1262:000007
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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
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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
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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
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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
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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
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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
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