By Linda Rowings
United Benefit Advisors
On Nov. 20, 2012, the Department of Health and Human Services (HHS) issued a proposed rule that addresses some of the questions surrounding essential health benefits and determining actuarial and minimum value.
Beginning in 2014, non-grandfathered insurance policies in the individual and small group markets will be required to provide coverage for “essential health benefits” (EHBs) at certain “metal” levels of coverage. Consistent with the statute, the proposed rule confirms that policies issued in these two markets, whether provided through or outside of the exchanges, will be required to cover the 10 essential health benefits (ambulatory/outpatient, emergency, hospitalization, maternity and newborn care, mental health and substance use, prescription drugs, rehabilitative and habilitative services and devices - e.g., speech, physical and occupational therapy, laboratory services, preventive and wellness services and chronic disease management, and pediatric services, including pediatric dental and vision care) and provide coverage with an actuarial value of 60, 70, 80 or 90 percent (the “metal” levels); actuarial value would mean the percentage of allowed costs the plan is expected to pay for a standard population.
Further, policies issued in the small group and individual markets must meet certain cost-sharing requirements (in most instances, the deductible for in-network services could not exceed $2,000 per person or $4,000 per family, and the out-of-pocket limit for in-network services could not exceed the high-deductible health plan limit for health savings account (HSA) eligibility, which is currently $6,050 per person or $12,100 per family). The proposed rule addresses an ambiguity in the statute and provides that the restrictions on maximum deductibles will not apply to self-funded and large-employer plans.
The proposed rule confirms that each state would choose its own essential health benefits (EHB) package, based on a “base-benchmark” plan already available in the state. In the event the base-benchmark plan does not cover all 10 EHBs (many plans do not currently cover habilitative care or pediatric vision or dental services) a method is provided to add the missing benefit.
Many states have already chosen their base-benchmark plan; those who have not have until Dec. 26, 2012, to make their selection or a default plan will be used. (The default is the largest plan by enrollment in the state’s small group market.) Information on state elections to date and the policy that will apply if no choice is made is here: Additional Information on Proposed State Essential Health Benefits Benchmark Plans | cciio.cms.gov
The proposed rule provides that other non-benchmark policies in the exchange and small-group market must generally provide the same coverage within each EHB category as the baseline plan, but that an actuarially equivalent benefit may be substituted within a category. Special rules apply to prescription drug benefits in an effort to provide adequate options to patients.
Determinations of actuarial value would generally be made using a calculator provided by HHS. A plan that is within 2 percent of the metal standard would be acceptable (so, for instance, a plan with an actuarial value of 68 percent to 72 percent would be considered a “silver” plan). Current-year employer contributions to an HSA or a health reimbursement arrangement (HRA) would be considered as part of the actuarial value calculation.
In a move to reduce debates with the states over cost, the proposed rule provides that state mandates that had been enacted by Dec. 31, 2011, would be considered EHBs.
For the most part, self-funded and large-group plans would not be required to provide coverage for each of the 10 EHB categories. However, these plans would not be allowed to impose annual dollar limits on EHBs. Also, although self-funded and large-group plans would not be required to cover all of the EHBs, they would be required to provide coverage for all of the “core” benefits -- hospital and emergency care, physician and midlevel practitioner care, pharmacy and laboratory and imaging -- to be considered a plan that provides “minimum value.” HHS and the IRS would provide a minimum value calculator and safe harbor plan designs that self-funded and large-group plans could use to determine whether the plan provides minimum value (the safe harbor plan designs were not included in the proposed rule).
The proposed rule may be found here: Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation The comment period closes Dec. 26, 2012.