While the pace of ACA news in mainstream media has slowed, health reform and changes to ACA-related regulations continue. So, we wanted to spend our blog today digging a little deeper into what you need to know and how these changes will affect states, insurers and you.
ACA affordability threshold will increase in 2019
The ACA affordability threshold for the 2019 calendar year will increase from 9.56 percent to 9.86 percent. This means employers can require employees to pay slightly more towards their employee-only coverage and it will still be considered affordable.
Out-of-pocket maximums and contribution limits will increase in 2019
The US Department of Health and Human Services (HHS) has announced the inflation-adjusted out-of-pocket (OOP) limits that will apply to non-grandfathered plans for plan years beginning in 2019. The OOP limit includes the plan’s deductible and cost-sharing amounts for benefits that are considered essential health benefits (EHB) under the ACA. Employee-only coverage OOP maximum will rise from $7,350 to $7,900, while family coverage OOP maximums will climb from $14,700 to $15,800.
For the 2019 calendar year, the IRS released new High Deductible Health Plan (HDHP) annual maximums and HSA contribution limits. HDHP annual out-of-pocket expenses for 2019 (deductibles, copayments and other amounts, excluding premiums) cannot exceed $6,750 for self-only coverage and $13,500 for family coverage.
For individuals with self-only coverage under a HDHP, the 2019 annual contribution limit to a Health Savings Account (HSA) is $3,500 and for an individual with family coverage, the contribution limit is $7,000. For married couples that carry family coverage, they are required to have two HSA accounts if they contribute the maximum of $7,000 (two individual coverage maximums).
2019 OOP maximum and contribution limits
States to have greater flexibility in defining Essential Health Benefits
Since its creation, established ACA guidelines have always required health plans — available to the small group and individual markets — to cover at least 10 essential health benefits (EHB). This list includes hospitalization, emergency services, maternity care, prescription drug coverage and care for substance abuse disorders and mental health services.
However, a new rule recently issued by CMS and set to take effect in 2020 will provide states with additional flexibility in how they select their EHB benchmark plan by providing three new options.
Option 1: States will now be able to choose from 50 EHB plans used by other states in their 2017 plan year.
Option 2: Insurers can replace one or more EHB categories used in other states 2017 health plan year such as: drug coverage or hospitalization.
Option 3: Lastly, a state may build their own set of benefits that could become their EHB-benchmark plan subject to a certain scope of benefits requirements.
The goal of this change is to empower state governments and give insurers more flexibility in designing plans to provide lower cost options. However, opponents argue the rule will provide more barriers to those with pre-existing conditions and increase costs for more comprehensive plans.
Individual mandate exemptions
Individual policy seekers now have expanded options as well. A new individual mandate exemption will be available for those who live in areas where only one insurer is selling ACA plans. An exemption may also be sought by those who oppose abortion but live in areas where the only plans available cover such services.
Easing provisions on insurers
While state and individual adjustments will gain most of the attention, CMS also released some rulings that could have a large impact on the way in which insurers operate in the marketplace.
- Adjustments to the premium threshold level.
CMS has raised the threshold level for premium rate hikes that require review by state regulators. Currently insurers who apply for premium rate increases of 10 percent or more are required to submit proposed rates to insurance department regulators for review and approval. The threshold for 2019 premium rate increases has been raised to 15 percent.
- Loosened insurer restrictions on Medical Loss Ratio provision
Another key change came in the medical loss ratio provision where CMS has loosened its restrictions for insurers. Beginning in 2019, the CMS is relaxing the rules surrounding how much of an insurer’s premium income must be spent on medical claims and quality improvement activities, a figure known as the Medical Loss Ratio (MLR). Insurers covering individuals and small businesses today must spend at least 80 percent of their premiums on healthcare and quality improvement. In 2019, states will be able to request changes to the minimum individual market MLR that insurers must meet if states can demonstrate that a lower MLR would help stabilize their markets.
Also, CMS will now allow insurers the option of reporting a standard 0.8 percent of earned annual premium for a minimum of three consecutive years in lieu of identifying, tracking and reporting actual expenses related to quality improvement activities.
Click here to read more MLR changes and their impacts to the individual market.
The only constant is change
The year 2019 is still six months away and already we can see that the healthcare landscape will be different because of the changes presented above along with ongoing state efforts to stabilize the marketplace and funding via Medicaid expansion and state individual mandate legislation. It’s important to follow these changes and understand the impact to your organization and employees. Health e(fx) continually monitors these changes and will keep employers informed through social media channels as changes occur. Please follow us on Twitter and LinkedIn!