Department of Health and Human Services Issues New Affordable Care Act Regulations
On November 20, 2012, the Department of Health and Human Services (HHS) issued proposed regulations to implement provisions of the Affordable Care Act (ACA). The 333 pages of proposed regulations:
(1) reinforce the key provisions of the Affordable Care Act
e.g., preventing providers from denying coverage to individuals with preexisting conditions, limiting out-of-pocket costs for consumers
(2) provide guidance on other key provisions
e.g., definition of essential health benefits, determination of actuarial value, accreditation standards, premium increases
(3) make changes to other provisions
e.g., limits on plan deductibles, higher premiums for smokers
Here is a list of some important portions:
Essential Health Benefits: Beginning in 2014, non-grandfathered plans in the individual and small group markets, both inside and outside of the Exchanges, along with certain other types of plans, must cover essential health benefits (EHB). The proposed regulation defines EHB based on a state-specific benchmark plan, and provides that states select a benchmark plan from among several options. All plans that cover EHB must offer benefits that are substantially equal to the benefits offered by the benchmark plan.
Actuarial Value: Actuarial Value (AV) is calculated as the percentage of total average costs for covered benefits that a plan will cover. Beginning in 2014, non-grandfathered health plans in the individual and small group markets must meet certain AVs, or “metal levels”--60 percent for a bronze plan, 70 percent for a silver plan, 80 percent for a gold plan, and 90 percent for a platinum plan--to compare plans with similar levels of coverage. The proposed regulation provides that a plan can meet a particular metal level if its AV is within 2 percentage points of the standard.
Accreditation Standards: The proposed regulation provides an application process and timeline for issuers offering coverage in a Federally-facilitated Exchange or State Partnership Exchange to become accredited.
Premium Increases: The proposed regulations provide that the ACA’s rule that older individuals cannot be charged more than three times the premiums of younger individuals must be implemented in small annual increases rather than large increases occurring less frequently.
Limits on Plan Deductibles: The proposed regulation provides an exception to the ACA’s $2,000 limit on individual deductibles in the small group market by allowing insurers to go above the $2,000 limit if they cannot reasonably create a benefit package at any metal level for $2,000 or less.
Higher Premiums for Smokers: The ACA allows insurers to charge smokers 1.5 times the premium rates of non-smokers. The proposed regulations provide an exception to this rule by prohibiting the larger premium for smokers enrolled in a smoking cessation program.
Comments to the proposed regulations are due December 26, 2012. For more information about the proposed regulations or the Affordable Care Act, please contact your Trust Fund counsel.
Author: Ezekiel D. Carder
