Minimum Essential Benefit Rules
On Feb. 20, 2013, the Department of Health and Human Services (HHS) finalized its regulations on the health reform law’s minimum essential benefits rules. The final rule generally follows the proposed regulation, allowing states to choose benchmark plans based on each state’s own approved plans.
The final regulation will apply to individual and small group health insurance sold both within and outside exchanges as of January 1, 2014. Generally, the health reform law (the Affordable Care Act, or ACA) requires that qualified health insurance must cover at least 60 percent of the actuarial value of covered medical services within 10 categories of care. The 10 categories of care include such benefits as hospitalization, emergency care, mental health care, and maternity care. A health insurance plan must be qualified for its purchasers to avoid assessments based on failure to provide affordable qualified health insurance. The assessments apply to individuals (the individual mandate) and to large employers (those with 50 or more full time (or full-time equivalent) workers.
The final rule, CMS-9980-F, provides that for states that do not establish their own exchanges, HHS will designate the largest small group plan operating in such state as that state’s benchmark plan. This will impact the 23 states that have not yet designated their benchmark plans. The agency will reassess this process in 2016.
Standards for accreditation of qualified health plans are laid out in the final rule. Among the standards is a rule that the calculation of the cost of additional state-required benefits (those in excess of the benefits required under the ACA) be done on a prospective basis.
The final rule also requires a minimum value calculator be used for testing whether a plan provides the minimum required value (60 percent of the actuarial value of the benefits provided). In a modification to the proposed rule, the final rule authorizes state regulation of substitution of benefits. This occurs when a plan substitutes actuarial equivalent benefits for one or more benefits in the base benchmark plan benefits.
Mental health coverage provisions in the final rule make clear that even though between 20 and 33 percent of individual health insurance has not historically provided mental health and/or substance use disorder coverage, the ACA will require such coverage under the minimum essential benefits rules as of 2014. Further, the rule states that current law parity of treatment rules will apply. States will have to change benchmark plans that do not contain these required mental health/substance use disorder benefits to bring them into ACA compliance.
The final rule also notes that qualified health plans must have a process by which insureds have access to prescription drugs that are not on the plan’s formulary. The final rule also discusses integration of stand-alone dental plans and pediatric vision plans with benchmark plans.
Reaction to the final rule is mixed. Some business groups and insurers are concerned that the minimum benefits required under the rule (and the ACA) results in insurance that is more expansive than what many consumers currently purchase, and thus may well result in significant premium increases, especially for young and healthy insureds. On the other hand, AHIP (America’s Health Insurance Plans)—while sharing the more general concern about the potential for premium increases due to “richer” minimum insurance coverage, applauded the final rule’s extension of more state control over benchmark plans and benefit design flexibility.
The Departments of Health and Human Services (HHS), Labor (DOL) and Treasury issued a frequently-asked questions (FAQ) document aimed at clarifying the rules for qualified, affordable health insurance. In addition to minimum benefit rules, they cover the permissibility of deductibility limits for small group plans to exceed ACA-set limits when the higher deductible limits are necessary to meet the 60 percent minimum actuarial value standard. This is something the health insurance industry requested.
The FAQs also clarify that for 2014, plans that use more than one service provider will be able to coordinate out-of-pocket maximum limits by meeting the conditions laid out in the FAQs. The FAQs also make clear that plans must comply with the out-of-pocket cost-sharing requirements with respect to major medical coverage, excluding prescription drug coverage and pediatric dental coverage. If a separate out-of-pocket maximum applies to those services or coverage other than major medical services, out-of-pocket maximums may not exceed other dollar limits under the ACA.
Rules governing cost-sharing and preventive services coverage (e.g., contraception) are also covered in the FAQs. Questions and answers address compliance with deduction limits and the annual limit on out-of-pocket maximums under the Public Health Service Act. They also clarify issues surround over-the-counter benefits, recommended immunizations, and well-woman health care visits.