Employee Benefits Compliance, Actuarial Value, Insurance Market Reforms

HHS Proposed Rules on 2019 Benefit and Payment Parameters, OOPs & EHB Benchmark Plans

final rule - insurance

On October 27th the Dept. of Health and Human Services (HHS) released proposed regulations on the benefit and payment parameters for 2019 (these are annual benefit provision updates), as well as proposed rules to:

  • increase state flexibility in selecting Essential Health Benefits (EHBs),
  • increase annual out-of-pocket maximums for non-HDHPs,
  • reduce some requirements in the individual and small group markets, and
  • remove a number of Small Business Health Options Programs (SHOPs) requirements.

Also that same day, the Centers for Medicare & Medicaid Services (CMS) posted the draft 2019 Actuarial Value Calculator and methodology. Insurers in the individual and small group market use this calculator to determine the “metal” level (bronze, silver, gold or platinum) of their plans. Some self-insured plan sponsors and third-party administrators also have used this calculator to determine their plans’ actuarial value.

Most of this new guidance applies to insurers and state regulators, but some is also of interest to employers who sponsor group health plans.

Links to the various guidance are at the end of this article.

Highlights of Proposed Rules of Interest to Employer Plan Sponsors

1- Maximum Annual Out-of-Pocket for non-HDHPs:  HHS-proposed increase in the maximum annual limitation on cost-sharing for 2019:

  • Self-only coverage: $7,900 (up from $7,350 in 2018)
  • Other-than-self-only (Family) coverage: $15,800 (up from $14,700 in 2018).

Note that this is not the same as the maximum out-of-pocket amount for H.S.A.-compatible HDHPs.  For 2018, the maximum out of pocket expenses for HSA-compatible HDHP plans is  $6,550 for self-only coverage and $13,100 for family coverage.

2- Essential Health Benefits (EHB) Options. Although the requirement to offer EHBs applies only to insured plans in the individual and small group markets, changes to EHB could also affect self-insured and large insured plans because they cannot impose annual or lifetime dollar limits on EHBs that they do cover. HHS proposed the following changes to give states more flexibility in selecting EHB benchmark plans, as of the 2019 benefit year.

  • Each state could choose another state’s 2017 benchmark plan to use as its own.
  • Each state could select a new EHB-benchmark plan annually, using the 2017 benchmark plan selection process as long as it is equal to the scope of benefits provided under a “typical employer plan,” and is no more generous than the most generous of a set of comparison plans. CMS issued guidance showing the methodology for comparing benefits.
  • Each state would still construct its EHB benchmark plan by incorporating the ten required EHB categories, but could replace any of its EHB categories with the one used in another state’s benchmark plan, and could take different categories from different states. E.g., a state could implement another state’s the prescription drug coverage EHB, that uses a different drug formulary.

3- Promotion of High Deductible Health Plans (HDHPs). HHS asked for comments on how to use Healthcare.gov to promote the availability of HSA-eligible HDHPs to enrollees on the Federal exchange, because the percentage of enrollees in HDHPs (on the Federal exchange) has decreased slightly over the last three years. In last year’s final rule on benefit and payment parameters (for 2018) HHS added a standardized plan option on the Exchange that is at the bronze level and qualifies as an HSA-eligible HDHP.

4- Small Business Health Options Programs (SHOPs): HHS proposes to allow small groups to enroll directly through a SHOP insurer or SHOP-registered agent or broker rather than through an online SHOP.  (SHOP is the small-group exchange.) The effective date for federally facilitated state SHOPs would be plan years beginning on or after January 1, 2018, but state facilitated SHOPs would have the option to maintain current operations of their online SHOP enrollment platforms.


Links to HHS Benefit and Payment Parameters for 2019 & other proposals

Notice of Proposed Rulemaking

Fact Sheet  (5 pages)

Read the Proposed Regulations  (365 pages)

Draft actuarial valuation (AV) methodology and draft AV calculator  (25 pages)