Econintersect: The proposed regulations for PPACA (Patient Protection and Affordable Care Act, aka Obamacare) are continuing to take shape. Two new documents of proposed regulations appeared in the Federal Register at the end of November, addressing what essential health services are covered and rules governing the setting of insurance premiums. Other factors defined include high deductible policy limits and limits for out-of-pocket annual expenses. In addition a limit of seven geographic rating areas within a state is proposed.
Also covered are various insurance requirements relating to the fairness in premiums and rate increases, the guaranteed availability and renewability of coverage, risk pools, catastrophic coverage, and student health insurance. After review and revision the regulations will go into effect in 2014.
The regulations for insurance premium ratings based on age are proposed as follows:
In addition to age ratings for premiums, tobacco usage ratings are also permitted.
From the Federal register 26 November, here is the summary of the essential health benefits (EHB) that must be include in state health insurance exchanges:
§ 156.110 EHB-benchmark plan standards.
General requirements. An EHB benchmark plan must meet the following standards:(a) EHB coverage. Provide coverage of at least the following categories of benefits:
(1) Ambulatory patient services.
(2) Emergency services.
(3) Hospitalization.
(4) Maternity and newborn care.
(5) Mental health and substance use disorder services, including behavioral health treatment.
(6) Prescription drugs.
(7) Rehabilitative and habilitative services and devices.
(8) Laboratory services.
(9) Preventive and wellness services and chronic disease management.
(10) Pediatric services, including oral and vision care.
States may deviate from the required EHB list provided that the coverages on that list are otherwise provided on an actuarialy equivalent basis by other state programs.
State exchanges may also include options in addition to the EHB required coverages such as dental, vision and long-term care coverage, which must be clearly identified as not part of the EHB. Costs of options will be born by each state including them, not by the federal government.
The proposed regulations also provide that any insurer offer a plan within a state exchange must offer the same coverage to individuals and small groups outside the exchange.
Some other key elements of the latest proposed regulations:
- High deductible plans may not exceed annual deductions of $2,000 for individuals and $4,000 for “other tiers”;
- High deductible plans will not exceed out-of-pocket expenses of $6,500 (individual) and $12,500 (“other tiers”) in 2013;
- For network based plans, out-of-network costs generally will not apply to out-of-pocket annual limits;
- Standard definitions for level of coverage (bronze, silver, gold and platinum) of various plans are defined;
- Platinum plans will cover 95% of the total allowed cost (5% co-pay);
- Gold plans will have 10% co-pay and silver 20%; and
- Bronze plans covering 60% of total allowed cost (40% co-pay) are the minimum that an employer of 50 or more employees must provide.
According to an article in Employee Benefit Adviser:
Beginning in 2014, the rules will substantially affect health insurance products purchased by individuals and small employers. The compliance burden starts earlier, but falls mostly on the insurers themselves and on state regulators, particularly regulators implementing an exchange.
The new requirements will have a meaningful, but smaller effect on the health insurance purchased by large employers. Employers with self-funded plans will need to follow the rules on MV [minimum value] calculations for purposes of complying with the employer mandate. Otherwise, the direct effect of the new rules on self-funded plans is relatively minimal.
Sources:
- Patient Protection and Affordable Care Act; Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation; Proposed Rule (Federal Register, Vol. 77 No. 227, Part II, 26 November 2012)
- Patient Protection and Affordable Care Act; Health Insurance Market Rules; Rate Review; Proposed Rule (Federal Register, Vol. 77 No. 227, Part III, 26 November 2012)
- HHS defines ‘essential health benefits’ under PPACA (Edward I. Leeds and Jean C. Hemphill, Employee Benefit Adviser, 07 December 2012)
