The Affordable Care Act requires non-grandfathered health plans in the individual and small group markets to include an "essential health benefits package" (EHB) beginning 2014. Insured health plans in the large group market become subject to the EHB requirements as qualified health plans offered through an Exchange beginning 2017.
EHB requires coverage to be provided at certain levels, called "metal tiers," which are described as bronze, silver, gold, or platinum. Each level corresponds to a specific actuarial value determination - 60%, 70%, 80% or 90% - which measures the "richness" of the health plan compared to its cost sharing requirements. For example, a bronze plan's actuarial value of 60% means that the plan would be expected to pay, on average, 60% of expenses for essential health benefits, and covered individuals, on average, would be expected to pay the remaining 40% through cost sharing (co-pays, deductibles, co-insurance, etc.). The expression of actuarial value as a metal tier is intended to allow purchasers to easily compare plans based on cost-sharing features, with the goal of better understanding the value of their health plan selections.
Last week, the Center for Medicare and Medicaid Services issued a bulletin setting forth the position of the Department of Health and Human Services (HHS) on how actuarial value should be calculated. The bulletin provides HHS's suggestions for implementing a uniform standard for insurers to use to confirm that their plans satisfy the specified metal tiers.
According to the guidance, standard population and claims data complied by HHS should be used for the calculation instead of plan-specific data. HHS would like to develop a universal calculator tool, equipped with standard data, for insurers to use to calculate values for their plans. An insurer's value for a specific plan would have to be within two percentage points above or below the value to take the name of a specific level. HHS also suggests that for purposes of calculating actuarial value for an employer health plan, the annual employer contribution to an employee's Health Savings Account associated with a qualifying High Deductible Health Plan (HDHP) and the amount made available for the first time in a given year under a Health Reimbursement Arrangement linked to an employer health plan would be considered part of the design of the plan, and the contribution would be considered part of the amount used by the employee for cost-sharing.
More guidance on the determination of an EHB package will certainly be forthcoming as 2014 approaches and as CMS receives comments on HHS's proposed regulatory approach to determining actuarial value. This will also impact future health plans offered through the Exchanges.
