A number of proposed rules have been issued under Health Care Reform regarding the law's requirements related to guaranteed availability of coverage, wellness programs, and essential health benefits. The following key highlights may be of interest to employers.
Guaranteed Availability of Coverage
Proposed rules issued by the U.S. Department of Health and Human Services would prohibit health insurance companies from denying coverage to an individual because of a preexisting condition, or from charging higher premiums to certain enrollees because of current or past health problems, gender, occupation, and small employer size or industry, for plan years beginning on or after January 1, 2014.
Specifically, the proposed rules require issuers offering non-grandfathered health insurance coverage in the individual or group market in a state to accept every individual and employer in the state that applies for coverage, subject to certain exceptions. These exceptions generally allow issuers to limit enrollment:
- To certain open and special enrollment periods;
- To an employer's eligible individuals who live, work, or reside in the service area of a network plan; and
- In certain situations involving network capacity and financial capacity.
In addition, health insurance issuers in the individual and small group markets would only be allowed to vary premiums based on age (within a 3:1 ratio for adults), tobacco use (within a 1.5:1 ratio and subject to wellness program requirements in the small group market), family size, and geography.
Nondiscriminatory Wellness Programs
The U.S. Departments of Health and Human Services, Labor, and the Treasury jointly released proposed rules to amend the nondiscrimination requirements for group health plans with respect to wellness programs under the federal Health Insurance Portability and Accountability Act (HIPAA) for plan years beginning on or after January 1, 2014.
In particular, the proposed rules would increase the maximum permissible reward under a health-contingent wellness program (i.e., a program offered in connection with a group health plan that requires an individual to satisfy a standard based on a health factor in order to obtain a reward) from 20% to 30% of the cost of coverage, and from 20% to 50% for wellness programs designed to prevent or reduce tobacco use.
The rules also include other proposed clarifications regarding the reasonable design of health-contingent wellness programs and the reasonable alternatives they must offer in order to avoid prohibited discrimination.
Coverage of Essential Health Benefits
Proposed rules issued by the U.S. Department of Health and Human Services outline issuer standards related to coverage of "essential health benefits." Essential health benefits are a core set of items and services that must be covered by non-grandfathered plans in the individual and small group markets (both inside and outside of exchanges) beginning in 2014.
Essential health benefits must include items and services within at least the following 10 categories:
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
To meet the Health Care Reform requirement that essential health benefits be equal in scope to benefits offered by a "typical employer plan," the proposed rules define essential health benefits based on a state-specific benchmark plan, including the largest small group health plan in the state. The rules propose that states select a benchmark plan from among several options identified in the proposed rules, and that all plans that cover essential health benefits must offer benefits that are substantially equal to the benefits offered by the benchmark plan.
For More Information
To learn more about these upcoming changes, you may read the proposed rules in their entirety. An overview of the proposed rules is available on Healthcare.gov. Our Summary by Year offers updates on other requirements related to Health Care Reform.
And be sure to stay tuned for our special download, Health Care Reform: What to Expect in 2013–2014, coming soon!