NEW YORK (CNNMoney.com) -- Close to a million insured workers will lose out on a significant bump in insurance coverage promised by health reform next year.
Companies affected by the law were threatening to drop coverage completely or raise employees' premiums by as much as 200% in order to comply with next year's deadline, according to a government official familiar with the matter.
"We were in a situation where if we didn't take action, folks could lose their only source of coverage or pay an outrageously high premium. That wasn't acceptable," the official said.
White House spokesman Robert Gibbs explained the Obama administration's position Thursday.
"We want to ensure that in the time that it takes to implement the law, workers don't find themselves at the mercy of insurance companies jacking up rates," Gibbs said at a press briefing.
Beginning 2011, the new health law mandates that insurers and employers gradually remove annual dollar limits on an individual's insurance coverage and eventually eliminate these limits by 2014.
Cigna said the waiver applies to a plan tha covers about 250,000 people. The company also said it plans to ask for an additional waiver each year until 2014.
In order to phase in this change, the law says that employers and insurers have to offer an annual coverage limit of least $750,000 by next year. The limit would increase to $1.25 million in 2012 and to $2 million in 2013.
Companies that hire a significant number of part-time workers -- such as retailers -- typically offer low-cost, low-coverage plans, called "mini-med" plans. Mini-med plans typically restrict individual insurance coverage to a few thousand dollars a year.
"We remain in conversations with our current provider and are confident that we'll continue to provide health care coverage for our 30,000 hourly restaurant employees," McDonald's said in a statement on Thursday. "We're pleased and encouraged by the progress that's been made by the Federal government on this issue."
The Department of Health and Human Services said waiver applications were taken on a "case by case basis." Among the factors officials consider are how much premiums would increase or how many employees would lose coverage without a waiver.