Premium tax credits to assist with purchasing qualified health plans through the marketplaces are available to individuals with modified adjusted gross household incomes between 100 and 400 percent of the federal poverty level who do not otherwise qualify for some form of minimum essential coverage, such as employer-sponsored coverage or a government program. To disqualify an applicant from premium tax credit eligibility, employer-sponsored coverage must be affordable (not exceeding 9.5 percent of modified adjusted gross household income for employee-only coverage) and provide minimum value. Large employers who fail to offer affordable minimum value coverage to their full-time employees face a penalty for each full-time employee who receives premium tax credits through a marketplace, currently set at $3,000 for a full year.
The Internal Revenue Service (IRS) proposed regulations to implement the minimum value standard for group health coverage in 2013, which have not yet been finalized. The Department of Health and Human Services (HHS), however, published final regulations defining minimum value in 2013. Under the proposed IRS and the 2013 final HHS regulations, a group health plan meets the minimum value requirement if
- anticipated spending for benefits provided under the group health plan that are essential health benefits under any one benchmark plan a state may use to determine essential health benefits for health plans in the individual and small group markets
- equals or exceeds 60 percent of the anticipated total allowed charges for coverage of these benefits for a standard population covered by a typical self-insured group health plan.
In 2014, however, it became apparent that group health plans might be able to meet this actuarial value standard without including hospitalization or physician services — services that have long been considered to be the core of major medical coverage. The IRS, therefore, released a notice stating that it intended to amend its regulations to provide that employer-sponsored group health plans would not meet minimum value standards unless they covered substantial hospitalization and physician services. Concurrently HHS released proposed and then final regulations amending its definition of minimum value coverage to include this change as part of its 2016 benefit and payment parameter rule.
On August 31, 2015, the IRS proposed a modification to its current proposed minimum value rule to also incorporate this change in its definition of minimum value. Under this proposed modification a group health plan must, to meet the minimum value standard, both meet or exceed an actuarial value standard of at least 60 percent and provide substantial coverage of inpatient hospital services and physician services.
While the actuarial value standard would apply as of December 31, 2013, the additional requirement for covering substantial physician and hospital services would apply for plan years beginning on or after November 3, 2014 for purposes of determining premium tax credit eligibility. This date will also apply for purposes of determining employer responsibility penalties, except that the hospital and physician coverage requirements will not apply until the end of plan years beginning after March 1, 2015 for group health plans that had entered into a binding commitment to apply noncompliant plan terms or had begun enrolling employees in a plan with noncompliant plan terms before November 4, 2014.
CMS Proposes 2017 Essential Health Benefits Benchmark Plans
The Affordable Care Act (ACA) requires non-grandfathered or transitional individual and small group plans to cover a set of ten groups of essential health benefits (EHB). The Centers for Medicare and Medicaid Services (CMS) has allowed the states to define the content of these benefits by reference to various benchmark plans, specifically one of the three largest small-group plans in the state; the three largest state employee health plans; the three largest federal employee health plans; or the state’s largest commercial health maintenance organization (HMO) plan. If a state fails to pick a plan, the default benchmark will be the state’ largest small group plan by enrollment.
State EHB plans for 2014 to 2016 were based on 2012 plans. State EHB benchmark plans generally include coverage of services that were mandated by state law prior to 2012. States may not require qualified health plans to cover benefits required by mandates adopted after the end of 2011 as EHB unless the state is prepared to pay the cost of fulfilling the mandate. State EHB plans for plan year 2017 and beyond will be based on 2014 plans.
On August 28, 2015, CMS published a list of the proposed 2017 benchmark plans for each of the states. The list includes a summary of the benchmark plan’s coverage of benefits for each state—including a list of covered prescription drug categories and classes—as well as supporting plan documents that provide details regarding plan coverage limits and exclusions.
Along with the 2017 benchmark plans, CMS also published each state’s 2014-2016 benchmark plan and a list of each state’s current mandated benefits. An updated list of state mandated benefits will be published later, although coverage benefits enacted after 2011 are presumably not part of the EHB unless the state is prepared to cover their cost for qualified health plans.
The release includes reminders that:
- Plans may not exclude enrollees from an entire category of benefits—other than excluding adults from pediatric benefits—even if such an exclusion exists in a benchmark plan;
- EHB plans may not cover non-pediatric dental or routine eye-examination service, long-term or custodial care, or non-medically necessary orthodontia and plans are not required under abortions as EHB, although they may be required to cover or to not cover abortions under state law;
- Insurers are required to cover habilitative and required preventive services or to comply with mental health parity requirements, even though the benchmark plan does not.
Public comments on the 2017 benchmark plans will be accepted through September 30, 2015.
Editor’s Note: The portion of this post beginning with “CMS Proposes 2017 Essential Health Benefits Benchmark Plans” was originally published as an August 31 update to a previous Implementing Health Reform post. It is included here for ease of reader access in conjunction with related material.
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