ACA Benefit and Payment Parameters for 2019 Make Slight Modifications to ACA Rules

• The Notice of Benefit and Payment Parameters for 2019 modifies rules related to the Affordable Care Act.
• The Centers for Medicare and Medicaid Services extended the transition policy for ACA-compliant health plans. Generally, this policy allows an additional year reprieve for certain insurance plans, from particular ACA market reform requirements.
• Employers should recognize how the benefit and payment parameter changes for 2019 will affect healthcare offerings.

The Department of Health and Human Services (HHS) released its Notice of Benefit and Payment Parameters for 2019, which in general establishes standards for health insurance companies and the health insurance marketplace for plan years beginning on or after Jan. 1, 2019. Although these annual rules made slight modifications to previous iterations, changes were limited to the boundaries of the Affordable Care Act (ACA).

The Centers for Medicare and Medicaid Services (CMS) also provided new guidance for hardship exemptions for the ACA's individual mandate. Essentially, CMS adjusted hardship exemptions to encompass regions where consumers have limited or no health plans available. Keep in mind that the Trump administration's tax reform legislation cuts the individual mandate's penalty to $0 in 2019. Consequently, the rule change's impact is minimal.

Transition policy extended in individual and small-group markets

In addition, CMS extended the transition policy for ACA-compliant health plans. This allows states to permit insurance plans in the individual and small-group markets that don't meet particular ACA market reform requirements, as long as the plans fulfill certain conditions. It’s up to the state if they allow these plans to be issued in either the individual or small group market. If the state permits it, then it’s up to health insurance carriers in those designated geographies to choose if they will offer these policies. This is the fourth time the transition policy has extended the duration where these plans are permissible and as with previous extensions, it gives an additional year.

The slight market changes engendered by this CMS action may affect the interactions among employers, employees, and the health care market, although not dramatically.

Highlights of changes to ACA benefits and payment parameters

Small Business Health Options Program (SHOP) functions

• In a shift of administrative duties and associated costs, health policy issuers may now be responsible for administrative duties.
  • SHOPs will no longer be required to provide employee eligibility, premium aggregation, or online enrollment functions.
• Employers may be responsible for navigating the collection of notices and premiums and distributing to the appropriate issuers.
• The Small Business Tax Credit will still be available to eligible small employers. Employers may work with issuers to verify eligibility, such as contribution information and employee eligibility.

Qualified employer participation in SHOP and employer notice responsibilities

• Employers must inform employees hired outside the initial or annual open enrollment periods of their insurance enrollment opportunities.
• Employers must disseminate plan information to qualified employees enrolling in qualified health plans (QHPs) through SHOP, including employees hired outside of the initial or annual open enrollment period.
• Employers will be required to notify QHP issuers promptly if a qualified employee receives a determination of ineligibility or elects to terminate coverage.

Individual mandate exemptions

• The annual premium for the lowest-cost metal-level plan (excluding catastrophic plans) can be used to determine whether a consumer without access to employer-sponsored coverage is eligible for a hardship exemption, based on affordability, for the 2019 plan year when no insurer in the county offers a bronze-level plan.
• CMS' Guidance on Hardship Exemptions advises that individuals who meet any of the following criteria will now qualify for a hardship exemption for 2018 and beyond:
  • Live in counties with only one or no health plan insurers;
  • Experience other circumstances that impede the purchase of health insurance; or
  • Only have access to plans that provide coverage for services to which they object on religious grounds.

This exemption will excuse individuals from paying the ACA penalty for not having qualifying coverage. To determine eligibility, the individual must complete a hardship exemption application.

CMS transition policy to ACA-compliant plans

• CMS extended by one year the states' ability to allow health plans in the individual and small-group markets that do not comply with particular ACA market reforms but don't qualify for grandfathered status. Reforms include pre-existing condition exclusions or discrimination based on health status; underwriting limitations for age, tobacco use and geography; guaranteed issue; and renewability.
• The transitional policy extends to coverage years beginning on or before Oct. 1, 2019, as long as the policy ends by Dec. 31, 2019.
• States may allow these plans in their individual insurance markets, small-group markets, or both.
• Such plans had to be in effect before 2014.

Medical loss ratio

• Issuers can now report an amount equal to 0.8 percent of earned premium in the relevant state and market, rather than the actual amount spent for healthcare improvement activities, as long as they use this reporting method for three consecutive years in all their markets.
• The information states must submit when applying for an adjustment to the 80 percent medical loss-ratio standard for the individual market is simplified.

Essential Health Benefits (EHBs)

For plan years starting Jan. 1, 2020, a state can:

• Adopt another state's EHB benchmark plan;
• Replace EHB categories from its plan with one or more from another state's plan; or
• Develop a new plan that stays within ACA parameters.

The burden of determining the scope of EHBs under a typical employer plan shifts from the federal government to states.

Impact on employers

While these changes don't affect employers directly, they have implications for employers' interaction with regional healthcare markets. Smaller companies participating in the small-group insurance market, or businesses that rely on the individual insurance market to support their employee population may feel the difference.

Companies should recognize how the benefit and payment parameter changes for 2019 will affect their healthcare offerings, and how they will affect employees' demand for access to employer-sponsored health benefits.

What's next

The HHS Notice of Benefit and Payment Parameters for 2019 further shifts decisions back to the states, with geography-specific impacts. Employers should stay alert to federal policy changes and their trickle-down effects in their respective states.