States Could Have More Say Over What’s Covered in Your Health Insurance in 2019

On October 27, the Department of Health and Human Services (HHS) released proposed regulations on health plan coverage requirements offered through state insurance exchanges for 2019. Here is a summary of the proposed regulations:

HHS Proposes New Rules for 2019

The first rule “is intended to increase flexibility in the individual market, improve program integrity, and reduce regulatory burdens associated with the Patient Protection and Affordable Care Act in the individual and small group markets,” something President Trump laid out in his Inauguration Day Executive Order. The rule is also intended to enhance the role of the states in the regulatory process and provide them with increased flexibility.

The HHS is moving away from the concept of the standardized benefit plan designs for 2019. It is instead interested in using plan display options to promote the availability of high deductible health plans (HDHPs), both of which are good for HSAs.

A New Focus on High Deductible Health Plans and HSAs

HHS notes that the proportion of available HSA eligible HDHPs has been stable in the federally-sponsored exchanges. However, the percentage of enrollees in HDHPs has decreased slightly over the last three years.

In short, HHS hopes to encourage the pairing of an eligible HDHP with an HSA to save enrollees money.

HHS says it is “particularly interested in exploring how to use plan display options on to promote the availability of HDHPs.”

Possible Elimination of the Meaningful Difference Standard

Current law requires plans to be “meaningfully different” from other plans offered by the same insurer within a service area and metal tier level (Gold, Silver, Bronze) to justify higher costs. HHS says it would like to eliminate this standard (which did not consider being an HSA qualified plan a meaningful difference), saying it will encourage more innovation in plan design and increase consumer choice.

2019 Out-of-Pocket Maximums Will Increase

For plan years beginning on or after January 1, 2019, out-of-pocket limits for all health plans may not exceed:

This is a seven percent (7%) increase from 2018.

Actuarial Value (AV) Calculations Unchanged

HHS refrained from making any major changes to the AV Calculator for 2019. The range of variability in actuarial value will remain +/- 2% for Bronze plans, to -2% to +5% in the 2018 rule; meaning Bronze plans can have an AV ranging from 58% to 65% beginning in 2018.

However, only plans with a deductible and out-of-pocket at the higher ACA limits can have an AV as low as 58% which means HSA-qualified plans, which have a deductible and out-of-pocket limit lower than ACA limits, can not have an AV below 61%. HHS is also allowing insurance carriers to design HSA qualified plans for the Platinum metal tier.

Lowering the Medical Loss Ratio (MLR)

HHS is proposing states be able to lower the minimum MLR thresholds for the individual market to 75 or even 70 percent. Adopting the lower standards should make it easier for HSA-qualified plans to meet the standard relative to the current 80 percent standard.

Essential Health Benefits Decided by the State

The proposed rule would give states more flexibility to define their benchmark plan and its essential health benefits (EHB) and would allow them to do so on an annual basis. The HHS has proposed four options to select an EHB-benchmark plan for 2019 which would allow states to:

  1. Maintain their current 2017 EHB-benchmark plan
  2. Select another state’s 2017 EHB-benchmark plan
  3. Replace one or more EHB-categories from another state’s 2017 EHB-benchmark plan. (This would allow states to pick and choose categories from other state’s EHB-benchmark plans to include in their own plans)
  4. Select a new EHB-benchmark plan so long as the plan is equal in scope to a typical employer plan and is no more generous than the most generous comparison plan. (States would decide if the proposed EHB-benchmark plan is equal in its scope of benefits provided under a typical employer plan)

The proposed rule would also allow EHB-compliant plans to substitute benefits (other than prescription drug benefits) both within and between EHB categories as long as the substituted benefit is actuarially equivalent to the benefit being replaced.

Finally, HHS is considering a “federal default definition of EHB” and notes the possibility of creating a national benchmark plan standard for prescription drugs, which could provide a consistent prescription drug default standard across states.



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