Health Insurance Exchange-Benefit Options

Monday, December 21, 2009Monday, December 21, 2009

The Health Insurance Exchange is required to offer a Basic, Enhanced, Premium, and/or Premium Plus health care plans. To participate in the Exchange, a carrier must offer at least a Basic plan within the carrier’s service area (geographical premium rating area). It appears the carrier will be restricted to one Basic plan within the service area. (Will there be more than one carrier per geographical premium rating area, most likely.) The carrier may also offer one Enhanced plan within the specified service area. In addition, if the carrier offers an Enhanced plan, they may also offer one Premium plan, within the service area. Finally, if the carrier offers a Premium plan, the carrier will be allowed to offer “one or more” Premium Plus plans for the service areas. (Will there be a restriction on the number of Premium Plus plans offered?)

The Basic plan is actuarially equivalent to 70 percent of the full value of the benefits provided under the reference benefits package, i.e., “essential benefits package”. Special attention is applied to Affordable Credit Eligible Individuals who are covered by the Exchange plans. The benefits offered in the Basic plan are adjusted to provide reduced cost-sharing based on their respective income tier. (Does this mean the “benefits” are reduced OR does it mean that the deductibles, co-pays, and/or co-insurances are modified for lower income individuals?) The Enhanced and Premium plans both offer the same benefits found in the Basic and also offer lower levels of member cost sharing, i.e., less out-of-pocket expenses for the member. (Premium levels will have to be adjusted to reflect the actuarial offset between the Basic and the Enhanced and Premium plans cost-sharing amounts.) The Premium Plus Plan offers the same benefits found in the Basic plan and also includes dental and vision care; provided those benefits have been approved by the Commissioner. The costs of these additional benefits are to be separate and distinct from the health care costs.

The Act directs the Commissioner to create a range of permissible variations in the cost-sharing for the Basic, Enhanced, and Enhanced plans. That variation is within the range of plus or minus 10%. Tiering in cost-sharing is also permitted relative to participation of preferred providers and prescription drugs. (The concept here is that carriers may be able to negotiate discounts, as they do today, with certain providers (provider networks) and pharmaceutical firms (formularies), allowing some cost sharing to passed on to the members.)

Over the years, many individual states have mandated that certain medical procedures be included in individual and group insurance policies sold within their respective states. Health care plans that are “self-insured” are generally exempt from such mandated benefits while those that are “fully-insured” are not. The Act does not exempt Exchange plans from offering state specific mandated benefits. However, states must reimburse the Commissioner for premiums amounts above the affordability premium credits, if such mandated benefits result in a net increase.

As might be expected, carriers will be allowed to provide health care plans thorough the Exchange only after successfully completing a bid solicitation, review, and negotiation process overseen by the Commissioner. The Commissioner will also be able to deny those premiums and/or premium increases that are “excessive”. (Of course this later step will have some form of an appeals process.)