Author: Tracy Morley, XpertHR Legal Editor

The Department of Health and Human Services (HHS) released long-awaited proposed rules related to the Affordable Care Act (ACA). The rules relate to health insurance market reforms, essential health benefits and wellness programs.

Health Insurance Market Reforms

Health insurance companies are prohibited from discriminating against individuals with pre-existing conditions in the proposed rule for health insurance market reforms. The proposed rule provides for:

  • Guaranteed Availability of Coverage - Health insurance issuers would be prohibited from denying coverage due to a pre-existing health condition.
  • Fair Health Insurance Premiums - Provides that health insurance issuers in both the individual and small group markets would only be allowed to vary premiums (within limits) based on age, tobacco use, family size and geography.
  • Single Risk Pool - Requires health insurance issuers to maintain a single statewide risk pool for each of their individual and small employer markets.
  • Guaranteed Renewability of Coverage - Reiterates protections already in place with respect to renewability of coverage for individuals and employers, and does not allow health insurance issuers to refuse to renew coverage if an individual or employee becomes ill or if he or she has a pre-existing condition.
  • Catastrophic Plans - To ensure affordable coverage options for young adults, and individuals for whom coverage would otherwise be unaffordable.

Additionally, the proposed rule would amend the standards for the rate review program to streamline data collection for health insurance issuers and states.

Comments should be submitted no later than 30 days after date of publication in the Federal Register (currently expected to be published in the next week).

Essential Health Benefits, Actuarial Value and Accreditation Standards

Policies and standards for coverage of essential health benefits (EHBs) and the determination of actuarial value are addressed by the second proposed rule, which also provides states with the flexibility to determine how EHBs are defined.

Essential Health Benefits - The ACA requires health plans offered in the individual and small group markets to offer a core package of essential health benefits (EHBs) that are equal in scope to benefits offered under a typical employer plan. The proposed rule provides that EHBs be based on state-specific benchmarks; that states select a benchmark plan (from a variety of options); and that plans that cover EHBs offer benefits equal to the benefits offered by the benchmark plan.

The proposed rule contains the proposed list of state-selected EHB benchmark plans and the default benchmark plan for states that do not select a benchmark plan.

Actuarial Value - In an effort to streamline and standardize the calculation of actuarial value (AV), HHS is providing a calculator which can be used to determine a health plans AV based on a national, standard population. Under this rule, beginning in 2015, HHS will accept state-specific data for the standard population if states choose to submit alternate data for the calculator. Additionally, the proposed rule contains standards and considerations for plans with benefit designs not easily accommodated by the AV calculator.

The rule also proposes a timeline for health plans to be accredited in federally-facilitated exchanges and an application process for accrediting agencies for certification purposes.

Comments should be submitted no later than 30 days after date of publication in the Federal Register (currently expected to be published in the next week).

Wellness Programs

HHS, Labor and Treasury jointly released proposed rules on wellness programs. The proposed rules, effective for plan years starting on or after January 1, 2014 encourage appropriately designed, consumer protective wellness programs in group health coverage; continue to support workplace wellness programs; and amend the standards for nondiscriminatory health-contingent wellness programs.

The proposed rules require health-contingent wellness programs to follow certain rules, including:

  • Programs must be reasonably designed to promote health or prevent disease. This means that a program would have to offer a different, reasonable means of qualifying for the reward to any individual who does not meet the standard based on the measurement, test or screening. Programs must have a reasonable chance of improving health or preventing disease and cannot be overly burdensome for individuals.
  • Programs must be reasonably designed to be available to all similarly situated individuals. A reasonable alternative means of qualifying for the reward would have to be offered to individuals whose medical conditions make it difficult, or for whom it is medically inadvisable, to meet the specified health-related standard.
  • Individuals must be notified of the opportunity to qualify for the same reward through alternative means. The proposed rules provide sample language that makes it easier for individuals to understand, and to increase the likelihood that those who qualify for a different means of obtaining a reward will contact the plan or issuer to request it.

The proposed rules also increase the maximum permissible reward under a health-contingent wellness program from 20 percent to 30 percent of the cost of health coverage, and further increase the maximum reward to as much as 50 percent for programs that are designed to prevent or reduce tobacco use.

The proposed rules do not specify the types of wellness programs employers can offer, and invite comments on additional standards for wellness programs to protect consumers.

Comments should be submitted no later than 60 days after date of publication in the Federal Register (currently expected to be published in the next week).

Additional Resources

Health Care Reform Resource Center

Health Care Reform Timeline - Chart

Employee Benefits > Health Care Benefits

Employee Benefits > Managing Health Care Costs

Employee Benefits > Health Information and Privacy (HIPAA)