On February 29, 2016, the Department of Health and Human Services (HHS) released its final Notice of Benefit and Payment Parameters for 2017 pertaining to the Affordable Care Act (ACA). It includes standards relating to annual limitations on cost-sharing, definitions of large employer and small employer, Exchange open enrollment periods for 2017 and beyond, a new exchange model, standardized benefit plan options in the federally facilitated Exchange (FFE), and more.
Annual Limitations on Cost-Sharing
Effective for plan years beginning on or after January 1, 2014, the ACA requires non-grandfathered plans to comply with an overall annual limit—or an out-of-pocket maximum—on Essential Health Benefits (EHBs). Under the final rule, the out-of-pocket maximum for 2017 increases to $7,150 for self-only coverage and $14,300 for family coverage.
Large Employer and Small Employer Definitions
The final rule revised the regulatory definitions of large employer and small employer to conform to the PACE Act. The new definition of a large employer is one that has an average of at least 51 employees during the preceding calendar year. A small employer is now one with an average of between one and 50 employees during the preceding calendar year.
However, the final rule allows states to elect to define a large employer as one with more than 100 employees and a small employer as one with 100 or fewer. The final rule also clarifies that an employer that was not in existence during the preceding calendar year determines whether it is a large employer or small employer based on the average number of employees that it reasonably expects to employ during the current calendar year.
Exchange Open Enrollment Period for 2017 and Beyond
Under the final rule, the annual open enrollment period for non-grandfathered policies in the individual market, inside and outside of the Exchange, are:
- For 2017 benefit year: November 1, 2016, through January 31, 2017
- For 2018 benefit year: November 1, 2017, through January 31, 2018
- For 2019 and later benefit years: November 1, 2019, through December 15, 2019
According to HHS, this policy will provide continuity in the short run as well as sufficient time for all entities involved in the annual open enrollment period process—including Exchanges and issuers—to make the necessary adjustments to meet the earlier deadline for the 2019 benefit year.
New Exchange Model
Under the ACA, states could choose one of the following three models for their Exchange:
- Create and operate their own State-Based Exchange (SBE);
- Have HHS operate an FFE for its residents; or
- Partner with HHS to create a partnership Exchange, so that some FFE functions are performed by the state.
The final rule adds an additional Exchange model—a State-Based Exchange on the Federal Platform (SBE-FP)—to enable SBEs to conduct certain processes using the federal eligibility and enrollment technology infrastructure on www.healthcare.gov. Under the final rule:
- The SBE-FP is primarily responsible for plan management functions, consumer assistance and outreach, ongoing oversight and program integrity, and ensuring that all Exchange requirements are met.
- Through the federal platform, www.healthcare.gov, HHS will be responsible for eligibility determinations, enrollment processing activities and associated federal platform services.
HHS will collect user fees to cover federal costs in states that choose to use the SBE-FP model. SBE-FPs will be required to enforce certain plan and issuer requirements that are no less strict than the requirements that HHS applies in the FFEs, and HHS will retain the authority to suppress plans on www.healthcare.gov in the appropriate circumstances.
Six Standardized Plan Options
The final rule creates six standardized benefit plan options in the individual market FFE. This will simplify the plan selection process by allowing consumers to more easily compare plans across issuers in the FFE. These standardized options would include:
- One bronze standardized option
- One silver standardized option
- A separate standardized option for each silver plan variation (73 percent, 87 percent and 94 percent) available to individuals who are eligible for cost-sharing reductions
- One gold standardized option
These plans will have a single-provider tier, a fixed in-network deductible, a fixed annual cost-sharing limit and standardized copayments and coinsurance for a key set of EHBs that comprise a large percentage of the total allowable costs for an average enrollee.
Issuers are not required to offer standardized options in 2017 and are still permitted to offer non-standardized plans. HHS is currently conducting consumer testing to determine how these plans will be displayed on www.healthcare.gov.
For additional information about the ruling, read our full Employee Benefits Legislative Brief or contact your Hylant representative.