(Bloomberg)—Almost a million workers, one-third of them members of New York's teachers union, were left out of a consumer protection in U.S. health law meant to cap insurance costs after the government exempted their employers.

Thirty companies and organizations, including Jack in the Box Inc. and the United Federation of Teachers, won't be required to raise the minimum annual benefit included in low-cost health plans covering seasonal, part-time or low-wage employees. The Department of Health and Human Services said it granted waivers in late September so workers with minimum plans would keep coverage without major premium increases. The agency provided the list of exemptions.

“The big political issue here is the president promised no one would lose the coverage they've got,” Robert Laszewski, CEO of consulting company Health Policy and Strategy Associates, said by telephone. “Here we are a month before the election, and these companies represent 1 million people who would lose the coverage they've got, so the administration can't fall into that trap.”

The biggest single waiver, for 351,000 people, was for the United Federation of Teachers Welfare Fund, a New York union providing coverage for city teachers. The United Agricultural Benefit Trust, the California-based cooperative that offers coverage to farm workers, got to exempt 17,347 people. San Diego-based Jack in the Box's waiver is for 1,130 workers, while McDonald's Corp. asked to excuse 115,000.

Rules exemptions

The plans will be exempt from rules put in place this year intended to keep people from having to pay for all their care once they reach a preset coverage cap. In McDonald's case, workers receive so-called mini-med programs as a low-cost way to cover part-time employees with limited benefits.

McDonald's told the Obama administration it may re-evaluate the plans unless it got a waiver. The Department of Health and Human Services said last week the administration was providing exemptions.

McDonald's, based in Oak Brook, Ill., and Jack in the Box didn't immediately respond to requests for comment.

Sen. Jay Rockefeller, D-W.Va., is leading a congressional investigation into whether limited-benefit plans provide sufficient coverage and give fair value to workers, he said in a letter last week.

Mr. Laszewski says Sen. Rockefeller's investigation misses the point, because companies can't afford to spend more on health coverage for lower-wage employees.

‘Best they can'

“These tend to be part-time workers or workers at minimum wage,” he said. “You've got people that are making $12,000, $14,000 per year.”

For traditional insurance, an average annual premium purchased through work was $4,824 in 2009, according to the Menlo Park, Calif.-based Kaiser Family Foundation.

“What the McDonald's of the world are doing is the best they can,” Mr. Laszewski said. While the limited benefit plans may not cover the cost of a major health-care episode, they give patients access to the lower prices of networks of doctors and hospitals, and may provide some up-front coverage, he said.

“Do they cover somebody who has cancer and has to go into the hospital? No, but they cut the cost in half,” he said.

The waiver program is intended to provide continuous coverage until 2014, when new government-organized marketplaces will offer insurance subsidized by tax credits, said Jessica Santillo, a Department of Health and Human Services spokeswoman. Until those subsidized plans are available, the government wanted to avoid imposing rules that may result in people getting excluded from the limited benefit plans, she said.

One-year waivers

The plans are popular with companies that have workers who don’t earn enough to afford coverage, or whose workforces might be prohibitively expensive to insure, said Daryl Richard, a spokesman for Minnetonka, Minn.-based UnitedHealth Group Inc., which offers limited-benefit plans to about a dozen companies.

The waivers are effective for a year and were granted to insurance plans and companies that showed employee premiums would rise significantly or that workers would lose coverage without them, Ms. Santillo said in an e-mailed statement. The administration announced the waiver program in a Sept. 3 memo.

Without the waivers, companies would have had to provide a minimum of $750,000 in coverage next year, increasing to $1.25 million in 2012, $2 million in 2013, and without limit in 2014. Allowing a waiver for plans with limits much lower than this will ensure that those beneficiaries will “not be denied access to needed services or experience more than a minimal impact on premiums,” the administration memo said.

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