On February 25, 2013, the Department of Health and Human Services (HHS) released its final rule (the Final Rule) setting forth standards for health insurance issuers under the Patient Protection and Affordable Care Act (the Affordable Care Act). Specifically, the Final Rule outlines exchange and issuer standards related to coverage of essential health benefits, minimum value and actuarial value. The Final Rule also confirms a timeline for qualified health plans (QHP) to be accredited in federally-facilitated exchanges, among other provisions.
 
The requirements set forth in the Final Rule are applicable to non-grandfathered health insurance plans as of January 1, 2014, and therefore need to be addressed well in advance of that date. Employers and insurers need to consider how these standards might affect their health insurance plans and how to avoid noncompliance issues as the deadline approaches.

Essential Health Benefits
As initially stated in the Affordable Care Act, the Final Rule confirms that health insurance plans in the individual and small group market must cover the following categories of services: (1) ambulatory patient services; (2) emergency services; (3) hospitalization; (4) maternity and newborn care; (5) mental health and substance use disorder services including behavioral health treatment; (6) prescription drugs; (7) rehabilitative and habilitative services and devices; (8) laboratory services; (9) preventive and wellness services and chronic disease management; and (10) pediatric services, including oral and vision care.

The Final Rule defines Essential Health Benefits based on state-specific benchmark plans. Pursuant to the Final Rule, a state may select its benchmark plan from among four types of health insurance plans that must be met by a qualified health plan: (1) the largest plan by enrollment in any of the three largest small group insurance products in the state’s small-group market; (2) any of the largest three state employee health benefit plans by enrollment; (3) any of the largest three national Federal Employees Health Benefits Program plan options by enrollment that are open to federal employees; or (4) the largest insured commercial non-Medicaid plan offered by a health maintenance organization operating in the state. The first benchmark referenced above will be the default option for states that decline to make a selection.

Minimum Value  
At the start of 2014, employers with 50 or more full-time or full-time equivalent employees that do not offer “minimum value” coverage will have to pay the Affordable Care Act penalty of $3,000 for each full-time employee who obtains coverage through a public exchange. Pursuant to the Final Rule, an employer-sponsored plan satisfies Minimum Value if it is designed to pay at least 60 percent (60%) of the total allowed costs of benefits. In the Final Rule, HHS provides several ways for determining whether an employer-sponsored plan provides Minimum Value. First, an employer may use the Minimum Value calculator published by HHS, which allows the employer to input information about its health insurance plan coverage and cost-sharing options to determine if the plan satisfies the Minimum Value requirement. Second, an employer can rely upon the design-based safe harbor checklists published by HHS to examine whether an employer-sponsored plan meets the Minimum Value threshold. Finally, an actuary can certify whether a group health plan that contains non-standard features meets the Minimum Value test.

Actuarial Value
With respect to actuarial value, the Final Rule affirms the metal levels (i.e., platinum - 90 percent (90%), gold - 80 percent (80%), silver - 70 percent (70%), and bronze - 60 percent (60%)) of coverage previously set forth in the Affordable Care Act; however, it also allows for variance of two percentage points. In order to determine the Actuarial Value of a health insurance plan, QHP issuers must use the Actuarial Value calculator published by HHS. If the Actuarial Value calculator is incompatible with the design of the health insurance plan, the Final Rule provides certain alternatives for determining Actuarial Value (e.g., an actuarial certification by the QHP issuer that conveys the process used to determine Actuarial Value).

Accreditation
Under the Final Rule, future exchanges are required to establish a uniform period following certification of a qualified health plan within which a QHP issuer must become accredited. Multi-state plans will be subject to the accreditation period established by the U.S. Office of Personnel Management. For participation in federally-facilitated exchanges, the Final Rule allows QHP issuers to become accredited during the first three years of QHP certification.