2019 Proposed Benefit and Payment Parameters
Each year, the Department of Health and Human Services (HHS) publishes a rather large update of Affordable Care Act (ACA) guidance to give insurance companies and public Exchange Marketplaces an idea of what next fall’s annual open enrollment will look like so they can plan accordingly. Over the weekend, HHS issued 365 pages of 2019 proposed benefit and payment parameters. As per usual, much of the guidance is directed at insures and Exchanges, with the bulk of those changes summarized in an HHS fact sheet. However, below are a couple of items which will interest employers.
HHS is accepting public comments for only a short 30-day window, due by 5:00 PM Eastern on Monday, November 27, 2017. Please remember any comments you submit become public record, so you will want to refrain from including personally identifiable information or other sensitive info.
State Essential Health Benefits (EHB) Benchmarks
All medical plans must ensure they do not impose annual or lifetime dollar limits on any benefits they cover which are EHBs. Some plans, such as insured plans sold in the individual or small group market, must comply with the EHB benchmark in their own state because the plan must cover all of that state’s EHBs. However, all other employer plans have flexibility to decide which state EHB benchmark they’d like to utilize since they don’t have to cover all EHBs.
States must periodically update their EHB benchmark to keep plans relevant, subject to some restrictions. For instance, the first set of EHB benchmarks were created in 2014, all states had to update them for 2017, and they can only choose from among certain plans that already exist in their own state (including the three Federal Employees Health Benefit Program, or FEHBP, options).
HHS is proposing to allow each state to modify their EHB benchmark any year they like, starting in 2019, and to give them less restrictions, such as the ability to:
- Maintain their existing EHB benchmark (easy button)
- Select another state’s EHB benchmark
- Replace one or more EHB categories with that from another state’s EHB benchmark
- Select a new EHB benchmark that is equal in scope to a typical employer plan and doesn’t exceed the most generous comparison plan (they propose some ideas here but ask for input)
- Perhaps even offer a federal default definition of EHB (probably starting with a focus on the prescription drug EHB category but eventually expanding to all categories)
HHS estimates about 10 states per year will change their EHB benchmark. Employers that choose which state’s benchmark to use to define EHBs for their own plan may find it a little more challenging to stay on top of the various available benchmarks in the future.
Indexing for 2019 OOP and Employer §4980H “Play or Pay” Penalties
The premium adjustment percentage is the percentage by which the average per capita premium for health insurance coverage in the United States exceeds the average per capita premium for 2013. This is then used to index:
- The annual out-of-pocket limit (OOP) for non-grandfathered plans from the 2014 levels of $6,350 single and $12,700 family, with single rounded down to $50 and family double it; and
- The employer §4980H “play or pay” penalties from their 2014 levels of $2,000 and $3,000, rounded down to the nearest $10.
The premium adjustment percentage is estimated to index 9 percentage points to about 25.2% in 2019. This is a substantial increase compared to what we’ve seen in the past.
IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.
This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.