In a nutshell, The Affordable Care Act has mandated that qualified health plans provide, at a bare minimum, “Essential Health Benefits” or (EHB) within at least 10 specific categories (see notes below). Additionally, these benefits must be segmented into “Medal” classes based on the amount of the total expenses they actually end up covering. This amount is referred to as the “Actuarial Equivalent” or (AV). These AVs are further broken down into Medal Colors based upon their value.
Beginning in 2014, the resultant classifications are as follows (percentages are approximates and will vary slightly):
- Bronze (which will pay approx 60%) see standard plan design (NY State)
- Silver (which will pay approx 70%) see standard plan design (NY State)
- Gold (which will pay approx 80%) see standard plan design (NY State)
- Platinum (which will pay approx 90%) see standard plan design (NY State)
Each medal class has a standard program that is to be offered by all carriers as the bare minimum. Naturally, the carriers will offer other products within the medal classification, but these other products must exceed the standard product and can not offer less benefits. (Please keep in mind that all of your favorite carriers may not have developed products to be offered on the exchange in all Medal classifications).
The Affordable Care Act ensures Americans have access to quality, affordable health insurance. To achieve this goal, the law ensures that health plans offered in the individual and small group markets, both inside and outside of Affordable Insurance Exchanges (Exchanges), offer a core package of items and services, known as “essential health benefits.” EHB must include items and services within at least the following 10 categories:
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
The Affordable Care Act sets forth that EHB be equal in scope to benefits offered by a “typical employer plan.” To meet this requirement in every state, the proposed rule defines EHB based on a state-specific benchmark plan, including the largest small group health plan in the state. The rule proposes that states select a benchmark plan from among several options identified in the proposed rule, and that all plans that cover EHB must offer benefits that are substantially equal to the benefits offered by the benchmark plan. This approach balances consumers’ desires for an affordable and comprehensive benefit package, our legal requirement to reflect the current marketplace, and issuer flexibility to offer innovative benefit designs and a choice of health plans.
The benchmark plan options include: (1) the largest plan by enrollment in any of the three largest products in the state’s small group market; (2) any of the largest three state employee health benefit plans options by enrollment; (3) any of the largest three national Federal Employees Health Benefits Program (FEHBP) plan options by enrollment; or (4) the largest insured commercial HMO in the state. The proposed rule also clarifies that in the event a state does not make a selection, HHS will select as the default benchmark the largest small group product in the state, as described in option (1).
If a benchmark plan is missing any of the 10 statutory categories of benefits, the proposed rule has the state or HHS to supplement the benchmark plan in that category. The proposed rule also includes a number of standards to protect consumers against discrimination and ensure that benchmark plans offer a full array of EHB benefits and services. For example, the proposed rule:
- Prohibits benefit designs that could discriminate against potential or current enrollees
- Includes special standards and options for health plans for benefits not typically covered by individual and small group policies today, including habilitative services
- Includes standards for prescription drug coverage to ensure that individuals have access to needed prescription medications.
The appendix of the proposed regulation includes the proposed list of state-selected EHB-benchmark plans, as well as the default benchmark plan for state that does not select a benchmark plan, for public comment. States can make an EHB-benchmark selection until the close of the comment period for this rule. Further information on the benchmark plans can be found on the CCIIO website.
Actuarial Value, or AV, is calculated as the percentage of total average costs for covered benefits that a plan will cover. For example, if a plan has an AV of 70 percent, on average, a consumer would be responsible for 30 percent of the costs of all covered benefits.
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. In addition, issuers may offer catastrophic-only coverage with lower AV for eligible individuals. “Metal levels” will allow consumers to compare plans with similar levels of coverage, which along with consideration of premiums, provider participation, and other factors, would help the consumer make an informed decision.
To streamline and standardize the calculation of AV for health insurance issuers, HHS is providing a publicly available AV calculator, which issuers would use to determine health plan AVs based on a national, standard population, as required by law. Under the proposed rule, beginning in 2015, HHS will accept state-specific data sets for the standard population if states choose to submit alternate data for the calculator. The proposed rule includes standards and considerations for plans with benefit designs that the AV calculator cannot easily accommodate. Consumer-driven health plans, such as high-deductible health plans and health savings accounts, are compatible with the AV calculator. The proposed AV calculator is posted on the CCIIO website.
HHS recognizes that health plans need some flexibility in meeting the metal levels. Therefore, we propose that a plan can meet a particular metal level if its AV is within 2 percentage points of the standard. For example, a silver plan may have an AV between 68 percent and 72 percent. In addition, the proposed rule provides flexibility for issuers in the small group market by permitting issuers to exceed annual deductible limits to achieve a particular metal level.