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Standardized Benefits


Benefit Standards Broadly Defined

The
 Affordable Care Act
 (ACA) was 
purposefully 
broad 
when 
it
 addressed 
the 
array 
of
 services 
that 
a
 plan 
must 
cover 
in 
order 
to 
be 
eligible 
to
 participate 
an 
exchange.
 The 
law 
required 
that 
the
 scope 
of 
benefits
 be 
"equal 
to 
the
 scope 
of 
benefits 
provided 
by 
a 
typical 
employer 
plan" and 
include 
at 
least 
the 
following: 
Ambulatory 
Patient 
Services; 
Emergency
 Services;
 Hospitalization;
 Maternity 
and
 Newborn 
Care;
 Mental
 Health
 and
 Substance 
Abuse
 Disorder
 Services
 (including 
Behavioral 
Health
Treatment);
 Prescription
 Drugs;
 Rehabilitative
 Services 
and
 Devices;
 Laboratory
 Services; 
Preventive 
and 
Wellness
Services;
 Chronic
 Disease
 Management;
 and
 Pediatric 
Services 
(including 
Oral 
and 
Vision
 Care 
for 
children).

Essential Health Benefits


The 
ACA
 
instructs 
the 
Secretary 
of 
the
 Department
 of
 Health
 and 
Human 
Services 
(HHS) 
to
 develop 
the 
full 
definition
 of 
essential
 
benefits, and 
to 
list
 all
 other
 services
 and
 benefits
 that
 participating
 plans
 must
 cover.
 It was expected that Department of Health and Human Services (HHS) regulations would further specify essential benefits at the federal level, but in mid-December 2011 HHS announced that it was passing the responsibility for defining essential benefits to the states. The HHS guidance says states can define their own set of essential benefits by using an existing major health benefit plan in the state as a benchmark. Covered California has chosen to use the Kaiser Permanente HMO 30 Plan - the largest small-group employee health benefit plan by enrollment in the state.

Enhancements at the State Level Could be Costly

If the Exchange Board 
feels 
that 
the
 HHS 
definition 
does 
not 
include 
benefits 
it
 wants
 to 
guarantee 
to
 California consumers , 
they 
may 
require 
that
 a
 qualified 
health 
plan 
offered 
in Covered California provides 
benefits 
in
 addition 
to 
the 
essential 
health 
benefits. 
In 
that
 case,
 however,
 California 
must 
assume 
the 
full
 cost 
of 
the
 additional
 benefits, 
either 
by 
paying 
the 
individual
 directly 
for 
the
 marginal 
cost 
of 
the 
state‐added
 benefits,
 or 
by 
paying 
the 
plan. 
In 
this 
way, 
if 
California
 wants 
to
 ensure 
some 
benefit 
(adult
 dental 
or
 vision,
for 
instance) 
is
 covered
 by 
the
 Covered California 
plans, 
yet 
is
 not 
included 
in 
the 
federal
 definition, 
it
 will
 have 
to 
use state 
funds 
and 
subscriber 
premiums
 to
 pay
 the 
additional 
costs.

Current Benefit Standards

The Exchange will group health insurance plans into 4 categories by actuarial value to make it easier for consumers to compare across options. In addition, the Echange web site and brochures will make plan comparison documents available that highlight differences in key plan features such as deductibles, co-pays, and benefit limits.

The 4 Plan Levels

  • Platinum -- Covers 90 percent of actuarial value with consumer cost-sharing of 10 percent.
  • Gold -- Covers 80 percent of actuarial value with consumer cost-sharing of 20 percent.
  • Silver - Covers 70 percent of actuarial value with consumer cost-sharing of 30 percent.
  • Bronze - Covers 60 percent of actuarial value with consumer cost-sharing of 40 percent.

Additionally, a catastrophic plan will be available to individuals under the age of 30 or those who otherwise qualify for a unaffordable exemption. It would have a deductible equal to the out-of-pocket maximum established under federal law for HSA qualified high deductible plans. For 2011, that amount is $6,150 for a family and will be slightly higher in 2014.

Consumer cost-sharing includes things such as deductibles, copayments and coinsurance. Plans offering the most coverage, such as Platinum and Gold plans, will have higher premiums and a lower level of consumer cost-sharing. Bronze and Silver plans will be cheaper to buy, but will expose you to substantial cost-sharing over time.

Out-of-Pocket Spending Caps

The ACA places caps on how much money insured people will have to spend out of their own pockets for health care services that are covered in the new law's essential benefits package. The out-of-pocket spending caps will follow a sliding scale: Those with lower and middle incomes will pay less out of pocket than those with higher incomes. The new caps guarantee that consumers will not have to pay more than a set amount annually in out-of-pocket expenses for covered services.

Benefit Standards and Adverse Selection

Minimum coverage standards will help prevent adverse selection. For example, if all policies must cover the same set of benefits, consumers will be less likely to gravitate toward policies based on their risk status. California law establishing the Exchange specifies that any carrier participating in the Exchange must offer at least one plan at each level of coverage - Catastrophic, Bronze, Silver, Gold, and Platinum - both inside and outside the Exchange for the individual health insurance or small business market, or both, if that carrier participates in both. This precludes a health plan from participating only at the Bronze level - where presumably the unsubsidized healthy people will be.

Monitoring the Effects of Standardized Benefits

Whatever standard for minimum coverage may be adopted, the Exchange can monitor the impact of coverage standards. Measurements of uncompensated care, medical debt, and other indications of underinsurance can be developed and implemented, with findings reported periodically. The Exchange could adjust minimum coverage standards in response to these measures.

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