FAQ: Changes to Health Plans Under the Federal Patient Protection and Affordable Care Act

FAQ: Changes to Health Plans Under the Federal Patient Protection and Affordable Care Act https://wahospitality.org/wp-content/uploads/2011/11/healthcare273a.jpg

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The federal Patient Protection and Affordable Care Act (ACA) includes numerous new requirements for what must be included in health care plans sold in the United States.  It also includes prohibitions on insurer actions that restrict access to health coverage based on health status.

The following are frequently asked questions regarding health plans in 2014:

Will the benefits included in health coverage be different in 2014?

Yes, but changes to health coverage have been phasing in since the law passed in 2010 so dramatic changes are not expected for health plans in Washington state.

Health Plan Changes Phased-in in 2010

The ACA required implementation of numerous reforms in September of 2010.  These reforms included:

  • No co-pays for preventive services
  • No lifetime coverage limits and restricted annual limits
  • Reissue of coverage unless there is fraud
  • Elimination of preexisting condition exclusions for children under 19
  • Dependent coverage for adult children up to age 26
  • Elimination of employer exclusions from coverage based on salary
  • Elimination of preauthorization requirements for emergency services

Health Plan Changes Required in 2014

Additional changes must be made for coverage provided in 2014 and beyond.  These changes include:

  • Standard benefit packages determined by the federal government
    • Required essential health benefits, including level of benefits and cost-sharing (further defined below)
  • Elimination of pre-existing condition exclusions
  • Elimination of premium setting strategies based on health status
  • Coverage for approved clinical trials
  • Deductible caps in the small group market – $2,000 for an individual and $4,000 for a family
  • 90-day new employee waiting periods
  • Elimination of lifetime benefit limits and annual limits for identified benefits
  • Tighter restrictions on FSA contributions

What are the “Essential Health Benefits”?

The federal law attempts to standardize coverage offered throughout the states by requiring that all health plans include what the law identifies as “essential health benefits.”  Rather than including specific benefit requirements, the law includes a list of “essential health benefit” categories that must be included in all plans and defers development of specific requirements to the rulemaking process.  The required essential health benefit categories are:

  • Ambulatory services
  • Emergency services
  • Hospitalization services
  • Maternity services and newborn care
  • Prevention and wellness services, including chronic disease management
  • Prescription drugs
  • Habilitative and rehabilitative services
  • Pediatric services, including dental and vision services
  • Laboratory services
  • Mental health, substance abuse and behavioral health services

The federal Department of Health and Human Services is in the process of developing the final requirements that will specify the overall level and type of services that must be provided in all health plans.  Due to the challenges of establishing such requirements, the department has deferred the final rules on the essential health benefits until 2016.

A transition period was established that requires all states to select an existing health plan that will serve as the benchmark for coverage in their state until the final essential health benefits have been defined.   Once the benchmark plan is selected, states must develop strategies to ensure that all of the essential health benefit categories are represented in the plan, whether they were already included or must be added to the benchmark plan.  Washington selected the largest small employer health plan by enrollment as its benchmark plan and must add benefits for habilitative services and pediatric services including dental and vision services, in order to fulfill the essential health benefit categories.

Washington has a significant number of state mandated health benefits.  Will those benefits go away in 2014?

No.  By allowing states to select a commercial health plan already available in the state as its benchmark plan, the federal Department of Health and Human Services preserved state decisions on state mandated benefits and thereby allowing the states to determine the fate of state mandates that exceed the federal requirements.  For states like Washington that already had a high number of state mandated benefits, the changes to the essential health benefit requirements will be much less dramatic than in states that had far fewer mandates.

I keep hearing about “gold” plans and “bronze” plans, what are these plans and what do these categories mean?

The federal law requires that all health plans sold in the individual and small group markets, as well as the state exchanges must be organized into what it has defined as “metal tiers.”  The tiers are bronze, silver, gold and platinum, and each tier represents a higher level of benefits but not necessarily more or additional service levels.

While the upper levels of coverage may indeed have enhanced benefits, the tiers represent the overall level of costs for the included services covered by the insurer within each level.  In the bronze level, insurers will pay approximately 60% of the cost of services provided in that level, with the enrollee paying the remaining 40% through a combination of premiums, deductibles, copayments and/or coinsurance.  In the silver level, insurers pay 70%, in the gold level insurers pay 80% and in the platinum level insurers pay 90%, with enrollees paying the remaining difference in each level through a combination of premiums, deductibles, coinsurance and/or copayments.

Because insurers are paying more of the costs for coverage in the higher tiers, premium levels will be higher in those tiers while deductibles, coinsurance and copayments will be lower.  At this time the tiers are not related to insurer required employer premium contribution levels.

I am a small employer using a high deductible health plan for my employees – is it true I may no longer be able to purchase this plan in 2014?

Potentially.  The federal law prohibits small employer plans with annual deductibles that exceed $2,000.  In addition, the law prohibits small employer plans in which enrollee cost-sharing (premiums, deductibles, copayments and coinsurance) exceeds $6,250 per year.  If you are currently purchasing a health plan that exceeds either of these restrictions, you will need to select different coverage for the 2014 plan year and thereafter.

Will insurers be able to refuse coverage for individuals that have preexisting conditions in 2014?

No.  Beginning in 2014, no insurer will be allowed to deny health care coverage to any individual with a preexisting health condition.  In states like Washington that have established state high risk pools for individuals that have been denied coverage in the past, there may be a transition phase for individuals to move from the high risk pools to traditional coverage but those decisions will be made by the individual state.

Donna Steward, President, Kiawe Public Affairs

This publication is intended to inform employers about  provisions of the Patient Protection and Affordable Care Act and how those provisions may affect them.  This information should not be construed as legal  or tax advice, and readers should not act upon the information contained therein without professional counsel.

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