Blue Cross and Blue Shield of Illinois

  November 1, 2013

Legislative Update
Essential Health Benefits and Cost-Sharing Limits: Frequently Asked Questions for Group Health Plans

We have created FAQs to help you better understand the Affordable Care Act’s essential health benefits (EHBs) and out-of-pocket maximum (OOPM) requirements. This information is subject to change, so be sure to read this weekly newsletter for any updates.

1. What are essential health benefits (EHBs)?

The Affordable Care Act (ACA) set 10 categories of items and services that are referred to as “essential health benefits” (EHBs):

  1. Ambulatory patient services
  2. Emergency services
  3. Hospitalization
  4. Maternity and newborn care
  5. Mental health and substance abuse disorder services, including behavioral health treatment
  6. Prescription drugs
  7. Habilitative and rehabilitative services and devices
  8. Laboratory services
  9. Preventive and wellness services, and chronic disease management
  10. Pediatric services, including children's dental and vision

Generally, ACA prohibits group health plans and insurers that offer health insurance coverage from placing annual and lifetime dollar limits on EHBs. Beginning with the first plan year on or after Jan. 1, 2014, more changes will go into effect.

2. What changes will go into effect in 2014?

Non-grandfathered individual and non-grandfathered insured small group plans will be required to cover EHBs beginning on the first plan year on or after Jan. 1, 2014. The minimum package of items and services that must be covered in each of the 10 categories will be generally defined by each state's EHB benchmark plan. (See questions 3 and 4 for more details about state benchmark plans.) Although grandfathered plans and large group plans (both fully insured and ASO) will not have to cover EHBs, there will be underlying rules they must follow.

Non-grandfathered Small Groups (1-50)

  • Must cover EHBs.
  • Must remove annual or lifetime dollar limits on EHBs (previously went into effect).
  • Must cap member out-of-pocket expenses for in-network EHBs. The out-of-pocket maximum cannot exceed $6,350 for individual coverage and $12,700 for family coverage in the 2014 plan year.
  • Must cap deductibles for EHBs at $2,000 for individual coverage and $4,000 for family coverage. The deductible cap can be exceeded if reasonably necessary to ensure the benefit plan reaches a “metallic level” (actuarial value threshold).

 

Non-grandfathered, Fully Insured Large Groups (51+)

  • Do not have to cover EHBs.
  • Must remove annual or lifetime dollar limits on EHBs that are covered (previously went into effect).
  • Must cap member out-of-pocket expenses for in-network EHBs they do cover. The out-of-pocket maximum cannot exceed $6,350 for individual coverage and $12,700 for family coverage in the 2014 plan year.

 

Non-grandfathered ASO Groups

  • Do not have to cover EHBs.
  • Must remove annual or lifetime dollar limits on EHBs they do cover (previously went into effect). Other types of limits may be put into place, including visit limits, day limits, occurrence limits, and per-episode or per-service limits. However, they must still comply with any applicable state or federal laws (e.g., Mental Health Parity).
  • Must cap member out-of-pocket expenses for in-network EHBs they do cover. The out-of-pocket maximum cannot exceed $6,350 for individual coverage and $12,700 for family coverage in the 2014 plan year.

Grandfathered Plans

  • Do not have to cover EHBs.
  • Must remove annual or lifetime dollar limits on EHBs they do cover (previously went into effect).
  • Do not have to cap member out-of-pocket expenses for EHBs.

 

3. What are state “benchmark plans”?

In December 2011, the Center for Consumer Information and Insurance Oversight (CCIIO) outlined its intended regulatory approach to defining EHBs through 2015. Under this approach, states were asked to select a benchmark plan from one of four pre-defined benchmark plan types established by CCIIO. If a state did not select a benchmark, the default benchmark is the small group health plan with the largest enrollment in the state.

Here is a link to our state benchmark plan. Please note that the benchmark plans published on cms.gov may not include the most current or comprehensive details.

If a state’s benchmark plan does not cover items and services in all 10 EHB categories, it must be supplemented with services and items from other benchmark plan options. Our small group health plans will cover the EHBs under their “home state” benchmark plans.

4. Why do the EHB benchmark plans matter to large group health plans?

Previously, insurers and self-funded plan sponsors used a “good faith” definition to determine which benefits are considered EHBs for the purpose of addressing dollar limits. Beginning with the 2014 plan year, insurers and self-funded plan sponsors must use an “authorized” definition (authorized by the U.S. Secretary of Health and Human Services [HHS]) of EHBs for large group plans to address dollar limits and to meet new out-of-pocket maximum (OOPM) requirements. What this means is even though large groups do not have to cover EHBs, they still must use some type of EHB definition authorized by HHS to know which services cannot have an annual or lifetime dollar maximum and will also apply toward the OOPM.

5. What standard or "authorized" definition will Blue Cross and Blue Shield of Illinois (BCBSIL) use to define EHBs in 2014?

For now, HHS has indicated that a state EHB benchmark plan, as supplemented (if necessary) by HHS to include coverage of all 10 EHB benchmark categories, is considered an “authorized” definition. Future guidance is expected from the federal government on this topic.

Our standard approach to an authorized definition for EHBs for the purpose of addressing dollar limits and OOPM requirements is to follow the benchmark plan in the state in which the coverage has been issued. Custom accounts (151+) can request an alternative “authorized” definition through their account representative.

6. How will BCBSIL approach the OOPM requirement and related safe harbor when it comes to pharmacy, vision and dental benefits for the 2014 plan year?

Non-grandfathered group health plans that offer EHBs must comply with annual out-of-pocket expense limits for any in-network EHBs and out-of-network emergency services they cover starting with the group’s 2014 plan year.

A safe harbor for the 2014 plan year allows groups and issuers to maintain separate OOPMs for EHBs administered by more than one service provider ― as long as they individually do not exceed $6,350 for individual coverage and $12,700 for family coverage. Generally, behavioral health vendors cannot be considered separate service providers for the purposes of the OOPM safe harbor. Benefit plans that are required to comply with mental health parity must have their medical and behavioral health benefits cross-accumulate to a single OOPM.

Here is a recap of how we will administer the OOPM for pharmacy, dental and vision benefits administered by separate service providers:

Small Group Metallic Plans (1-50) (both on and off the Marketplace)

  • There will be a single OOPM for the 2014 plan year for small group metallic plans that are non-grandfathered.
  • For plans with a drug card, the member cost share will load to the OOPM.
  • For BCBSIL plans with Integrated BlueScriptSM, member liability will count toward the OOPM. (BCBSIL plans that include BlueScript will transition to Integrated BlueScript policies on Jan. 1, 2014.)
  • Pediatric dental will load to a separate OOPM, not to exceed $700 for coverage of one child and $1,400 for coverage of two or more children.
  • Pediatric vision will be included with no member cost sharing. Therefore, there is no member liability to be applied to the OOPM.

 

Standard (Pre-packaged) Large Groups (51+)

There will be no changes on how Blue Cross and Blue Shield of Illinois (BCBSIL) loads the OOPM bucket for pharmacy, dental and vision benefits for standard (pre-packaged) health plans that are non-grandfathered for the 2014 plan year. This mirrors the OOPM structure used for these benefits for the 2013 plan year.

Here’s a recap of our standard approach to OOPM for pharmacy, dental and vision benefits that are not currently embedded in the medical plan for the 2014 plan year.1

  • Prime pharmacy benefits will not have a separate OOPM under the 2014 OOPM safe harbor.
  • For plans with a drug card, the member cost share will not go toward OOPM under the 2014 OOPM safe harbor.
  • For BCBSIL plans with Integrated BlueScript, member liability will count toward the OOPM. (BCBSIL plans that include BlueScript will transition to Integrated BlueScript policies on Jan. 1, 2014.)
  • Dental and vision coverage will remain unchanged.2 For example, if the pediatric dental benefits are embedded in the medical plan, they will load the OOPM as they do today. If the pediatric dental benefits are stand-alone benefits and meet the definition for “excepted” benefits, they are not subject to the ACA OOPM requirement. Therefore, they would remain the same as the 2013 benefit structure.

Custom Fully Insured and ASO Large Groups (151+)

The BCBSIL approach to OOPM for pharmacy, dental and vision benefits for 2014 plan years will remain as it has been for 2013 for non-grandfathered large group accounts.

Here’s a recap of our standard approach to OOPM for pharmacy, dental and vision benefits that are not currently embedded in the medical plan for the 2014 plan year:1

  • A separate OOPM for pharmacy is not required as long as the plan does not have a pharmacy OOPM in 2013.
  • BCBSIL will support a separate OOPM for Prime Therapeutics and ESI/Medco upon request.
  • BCBSIL will not be able to support a separate OOPM for other Pharmacy Benefits Managers (PBMs) for Jan. 1, 2014.
  • Dental and vision coverage will remain unchanged.2 For example, if the pediatric vision benefits are embedded in the medical plan, they will load to the OOPM as they do today. If the pediatric dental benefits are stand-alone benefits and meet the definition for “excepted” benefits, they are not subject to the ACA OOPM requirement. Therefore, they would remain the same as the 2013 benefit structure.

1Plans that integrate pharmacy with medical benefits in 2013 can maintain that integration for the 2014 plan year.

2 The ACA OOPM requirement does not apply to dental and vision discount programs.

This communication is intended for informational purposes only. It is not intended to provide, does not constitute, and cannot be relied upon as legal, tax or compliance advice. The information contained in this communication is subject to change based on future regulation and guidance.

 


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