Final HHS Rules Address Essential Health Benefits and Required Cost-sharing

Practical Law Legal Update 4-524-3303 (Approx. 5 pages)

Final HHS Rules Address Essential Health Benefits and Required Cost-sharing

by PLC Employee Benefits & Executive Compensation

Essential Health Benefits

Beginning in 2014, all non-grandfathered health plans in the small group and individual markets must cover EHB, which generally includes ten minimum benefit categories (for example, hospitalization, emergency services, and maternity care). EHB must be equal in scope to benefits offered under a typical employer plan, and the final regulations define EHB by reference to state-specific benchmark plans. States can choose their benchmark plan from among several options (for example, the largest small group private health insurance plan by enrollment in the state).

Appendix A of the final regulations lists the EHB benchmark plans for all 50 states, the District of Columbia and Puerto Rico for 2014 and 2015.

Required Cost-sharing

Beginning in 2014, the ACA imposes annual limits on cost-sharing, such as deductibles, coinsurance or copayments (see Practice Note, Cost-Sharing Restrictions Under the ACA). Among other things, the final regulations specify:

Annual dollar limits for self-only and non-self-only coverage for 2014 and later years, which are tied to the enrollee out-of-pocket limit for high-deductible health plans (see Practice Note, Defined Contribution Health Plans).
Annual dollar limits on deductibles for plans in the small group market for 2014 and later years.
That cost-sharing requirements for benefits from a provider outside a plan's network do not count towards the annual limits on cost-sharing or deductibles.

Actuarial Value Calculations

Starting in 2014, health plans that provide EHB must also satisfy AV standards that:

Generally measure the generosity of a plan's benefits.
Are calculated as the percentage of total average costs for benefits covered under a plan. For example, a plan having an AV of 70% means that a participant generally is responsible for 30% of the cost of all covered benefits.
Are keyed to "metal levels" that:
- reflect minimal AV percentages within a de minimis variation; and
- require plans to be a bronze (60% AV), silver (70% AV), gold (80% AV) or platinum (90% AV) plan.

Under the final regulations, insurers can calculate the AV of health plans using an AV Calculator made available by HHS. If a plan's design is not compatible with the AV Calculator, the AV can be determined using a process addressed in the final regulations.

Also, the final regulations clarify that the AV Calculator treats health savings account (HSA) contributions and amounts newly made available under an integrated health reimbursement arrangement (HRA) (that may be used only for cost sharing) the same way it treats any other plan benefit. For example, a $1,000 HSA employer contribution is treated in the AV Calculator as if a plan with a $1,000 deductible is reduced to $0. However, HSA contributions or amounts newly made available by the employer under an integrated HRA that may only be used for cost sharing can be considered part of the AV calculation when the contribution is:

Available.
Known to the insurer at the time the plan is purchased.

Nondiscrimination Requirements

The final regulations also include nondiscrimination rules under which an insurer does not provide EHB if a benefit design or implementation discriminates based on an individual's:

Age.
Life expectancy.
Present or predicted disability.
Degree of medical dependency.
Quality of life.
Other health conditions.

However, the final regulations clarify that the nondiscrimination rules do not prevent an insurer from appropriately using reasonable medical management techniques.

Accreditation Standards

Regarding accreditation, the final regulations:

Provide a timeline for QHPs to be accredited in the health insurance exchanges.
Amend earlier regulations addressing the application process for recognizing additional accrediting entities for certifying QHPs.

Accreditation Timeline

The health insurance exchanges must establish a uniform period following QHP certification during which a QHP insurer that is not already accredited must become accredited. The final regulations provide the accreditation timeline that will be used for this process.

Process for Accepting New Accreditation Entities

The final regulations also include procedures that allow additional accrediting entities to apply for HHS recognition as accrediting entities for purposes of QHP certification. After receiving an entity's application, HHS will publish a notice in the Federal Register that:

Identifies the accrediting entity making the request.
Summarizes HHS's analysis of whether the accrediting entity meets the criteria described in the final regulations.
Provides a minimum 30-day public comment period.

Once the comment period ends, HHS will publish a notice in the Federal Register indicating the entities that are and are not recognized as accrediting entities. New applicants will be evaluated using the same criteria as for the National Committee for Quality Assurance (NCQA) and URAC, which were recognized as accrediting entities in November 2012.

Final HHS Rules Address Essential Health Benefits and Required Cost-sharing | Practical Law