April 17, 2018 | https://www.federalregister.gov/documents/2018/04/17/2018-07355/patient-protection-and-affordable-care-act-hhs-notice-of-benefit-and-payment-parameters-for-2019
On April 17, 2018, the 2019 Notice of Benefit and Payment Parameters was published in the Federal Register. These final regulations adopt most of the proposed regulations, which were issued on Oct. 27, 2017, although there are some deviations in the final regulations.
The rules – which are generally effective for plan years beginning on or after Jan. 1, 2019 – are intended to enhance the role of states in the individual and small group markets, provide states with additional flexibilities, reduce regulatory burdens associated with the ACA and improve affordability.
Many of the rules are aimed primarily at insurers as they are technical in nature and related to the parameters and provisions for the risk adjustment program. The rules which may be of interest to employers are summarized below.
Small Business Health Options Program (SHOP) Premium Rating
Issuers offering coverage through a SHOP are not required, under federal law, to offer average enrollee premiums (commonly referred to as composite rates). They may be required or permitted to do so under applicable state law.
SHOP Guaranteed Availability of Coverage
Effective for plan years beginning on or after Jan. 1, 2018, an insurer may limit enrollment of an employer to the annual enrollment period of November 15 through December 15 of each year if the employer fails to comply with the group participation rules.
Off-Exchange Special Enrollment Periods
Individuals are permitted to enroll mid-year in off-exchange coverage following the gaining of a dependent through marriage, birth, adoption, placement for adoption, placement in foster care or through a child support order (or other court order). The individual may enroll in or change coverage along with their dependents, including the newly gained dependent and any existing dependents. The new dependent also has an independent right to enroll in coverage without the parent or spouse.
Broker-assisted SHOP Enrollment
SHOP rules relax the requirements for interested small employers to enroll in the SHOP online. Small employers who desire to participate in the SHOP will have the option to utilize a broker rather than use the online enrollment platform.
As a result, a state exchange on the federal platform will no longer be able to utilize the federal platform for the functions of employee eligibility, enrollment and premium aggregation functions.
Verification of Employee’s Eligibility for Premium Tax Credit
The proposed rules requested information on ways to improve verification of whether an exchange applicant reasonably expects to be enrolled in employer-sponsored coverage or is eligible for minimum value, affordable coverage from an employer — as such coverage renders the individual eligible for an advanced premium tax credit.
The final rules discuss the need for a comprehensive database of information on employer-sponsored coverage, but acknowledges that one does not currently exist and the building of such a database would be costly. The federally facilitated exchange (FFE) conducted a pilot study that involved the exchange contacting the employers of individuals receiving a premium tax credit. The employers were contacted by telephone based on contact information provided by the individual on the application.
Though only a small sampling of employers were contacted, the FFE found that this approach was not cost-effective. At this time, exchanges will continue to perform verifications using the federal employment database, SHOP database and any alternative method approved by HHS. This means that employers may not have an advanced opportunity to verify an employee’s eligibility for a premium tax credit.
If an employee is ineligible for a premium tax credit due to an employer’s offer of coverage, a large employer would have an opportunity to appeal any associated employer mandate penalty assessed after the fact through the Letter 226J process.
Essential Health Benefits (EHB) Benchmark Plans
States will have greater flexibility in how they select their EHB benchmark plans for plan year 2020 and beyond.
A state’s benchmark plan directly impacts a group health plan’s design in that it serves as a reference plan that defines the scope and limits applied to EHBs. Beginning in 2020, states will be able to select a new benchmark plan annually, select another state’s benchmark plan or substitute categories of benefits from another state’s benchmark plan. Under the proposed rules, CMS requested comments regarding a federal default definition of EHB with states having the ability to expand benefits beyond the default definition.
This specific provision is not being implemented at this time.
Stand-Alone Dental Plans (SADP)
Effective in 2019, SADPs will not be required to meet any specific actuarial valuation. This rule is intended to increase the number of options and plan designs available to consumers.
Medical Loss Ratio (MLR)
Rather than an insurer tracking and reporting their actual Quality Improvement Activity expenses, they will be able to use a standardized amount based on 0.8 percent of the insurer’s earned premium for the year.
This could affect the frequency and amount of MLR rebate checks distributed by insurers to fully insured group health plans.
Maximum Out-of-Pocket Annual Limits
The maximum out-of-pocket limits for 2019 will be $7,900 for single coverage – up from $7,350 in 2018 – and $15,800 for family coverage (up from $14,700 in 2018).
Similar to the preamble of the proposed rules, CMS continued to encourage insurers to offer more qualified high deductible health plans to HSA-eligible individuals. This is consistent with several proposed congressional bills that would expand HSA funding.
Lastly, CMS stated an intention to consider proposals in future rulemaking that would help reduce drug costs and promote drug price transparency.
The rules are generally effective for plan year 2019, unless otherwise indicated. Employers should work with their insurers and administrators to implement the new out-of-pocket limits. Small employers should work with their advisors concerning any questions related to the SHOP and participation requirements.