ACA News & Publications

ACA Pathways: 2019 Out Of Pocket Maximum Cost Sharing Limits

April 23, 2018

The Department of Health and Human Services (HHS) has released its final Notice of Benefit and Payment Parameters for 2019. This final rule describes benefit and payment parameters under the Affordable Care Act (ACA) that apply for the 2019 benefit year. Standards included in the final rule relate to:

  • Annual limitations on cost sharing;
  • The individual mandate's affordability exemption;
  • Special enrollment periods in the Exchanges; and
  • Essential health benefit benchmark plan options.

Although the tax reform bill effectively eliminated the individual mandate penalty beginning in 2019, the final rule notes that individuals may still need the affordability exemption to determine eligibility for catastrophic coverage.

The final rule also makes changes to certain standards for enrollment in the Small Business Health Options Program (SHOP) Exchange. Finally, the rule eliminates standardized plan options in the federally facilitated Exchanges.

Annual Limitations On Cost Sharing

The ACA requires non-grandfathered plans to comply with an overall annual limit, or an out-of-pocket maximum, on essential health benefits (EHB). For 2019, the out-of-pocket maximum will increase to $7,900 for self-only coverage and $15,800 for family coverage. This is an increase from the 2018 limits of $7,350 and $14,700, respectively.

Individual Mandate's Affordability Exemption

Under the ACA, individuals who lack access to affordable minimum essential coverage (MEC) are exempt from the individual mandate penalty. The tax reform bill that was passed at the end of last year reduced the ACA's individual mandate penalty to zero, effective beginning in 2019. As a result, beginning in 2019, individuals will no longer be penalized for failing to obtain acceptable health insurance coverage.

However, the final rule notes that individuals may still need to seek this exemption for 2019 and future years (for example, in order to be eligible for catastrophic coverage). For 2019, an individual qualifies for this affordability exemption if he or she must pay more than 8.3 percent of his or her household income for MEC.

New Exchange Special Enrollment Period

Under the Exchanges, certain special enrollment periods are available to ensure that people who lose health insurance during the year, or who experience other qualifying events, have the opportunity to enroll in coverage. The 2019 final rule establishes a new special enrollment period that allows pregnant women who are receiving health care services through Children's Health Insurance Program (CHIP) coverage for their unborn child to qualify for a 60-day loss of coverage special enrollment period upon losing access to this coverage.

New Essential Health Benefit-Benchmark Plan Options

The ACA requires non-grandfathered plans in the individual and small group markets to offer a core package of items and services, known as essential health benefits, or EHBs. The EHB package includes items and services in 10 general benefit categories (such as hospitalization, maternity and newborn care, mental health and substance use disorder services, and prescription drugs), and should be equal in scope to benefits offered by a typical employer health plan. To meet this requirement in every state, HHS further defines EHBs based on a state-specific benchmark plan. States could select a benchmark plan from among the following options:

  • The largest plan by enrollment in any of the three largest products by enrollment in the state's small group market;
  • Any of the largest three state employee health benefit plan options by enrollment;
  • Any of the largest three national Federal Employees Health Benefits Program plan options by enrollment; or
  • The HMO plan with the largest insured commercial non-Medicaid enrollment in the state.

If a state did not select a benchmark, HHS selected the largest plan by enrollment in the largest product by enrollment in the state's small group market as the default benchmark plan.

Beginning with the 2020 plan year, the final rule allows states to select a new EHB-benchmark plan on an annual basis and provides substantially more options in what they can select as an EHB-benchmark plan. Under the final rule, states may:

  • Choose from the 50 EHB-benchmark plans that other states used for the 2017 plan year;
  • Replace one or more EHB categories of benefits under its EHB-benchmark plan used for the 2017 plan year with the same categories of benefits from another state's EHB-benchmark plan used for the 2017 plan year; or
  • Otherwise select a set of benefits to become its EHB-benchmark plan, provided that the new EHB-benchmark plan does not provide more benefits than a set of comparison plans and is equal to the scope of benefits provided under a typical employer plan, as required by the ACA.

However, in all cases, states cannot select an EHB-benchmark plan that is more generous than the most generous comparison plan.

In addition, the final rule allows states to maintain their current 2017 EHB-benchmark plan without taking any action. In previous years, states that did not take any action with respect to their EHB-benchmark plan defaulted to the federal benchmark plan option.

Changes To The Shop Exchange

Each state is required to have a small business component of their Exchange, called the SHOP, where small businesses can purchase health insurance coverage for their employees. The final rule eliminates the online enrollment process through the SHOP Exchange, and instead allows employers to enroll through a SHOP plan issuer or a SHOP-registered agent or broker (called "direct enrollment").

As a result, SHOP Exchanges are no longer required to provide employee eligibility, premium aggregation and online enrollment functionality. For plan years beginning on or after January 1, 2018, federally facilitated SHOPs and state-based SHOPs using the federal platform will no longer provide these services.

State-based SHOP Exchanges have the flexibility to maintain current operations of their online SHOP enrollment platforms or take advantage of the regulatory flexibilities available through the final rule to design a SHOP that best meets the needs of the small group market in their state. The Small Business Health Care Tax Credit will continue to be available to employers who enroll their small group in a SHOP plan.

Standardized Exchange Plan Options Eliminated For 2019

Beginning in 2017, the federally facilitated Exchanges offered a number of standardized benefit plan options, called "simple choice plans" in the individual market to simplify the plan selection process by allowing consumers to more easily compare plans across issuers in the federally facilitated Exchanges. The standardized options each had a single provider tier, fixed deductible, fixed annual cost-sharing limit, four drug tiers, and fixed copayment or coinsurance for a key set of EHBs that comprise a large percentage of the total allowed costs for a typical population of enrollees. In addition, HHS provided differential display of these plans on www.HealthCare.gov.

However, the final rule eliminates the standardized plan options in the federally facilitated Exchanges for the 2019 plan year, due to concern that providing differential display for these plans may limit enrollment in coverage with non-standardized option plan designs, removing incentives for issuers to offer coverage with innovative plan designs.

For More Information
For more information about this ACA Pathways or about any other health care reform-related provisions, please contact your Burnham Benefits consultant or Burnham Benefits at:

Burnham Benefits
949.833.2983
inquiries@burnhambenefits.com


Burnham Benefits does not engage in the practice of law and this publication should not be construed as the providing of legal advice or a legal opinion of any kind. The consulting advice we provide is intended solely to assist in assessing its compliance with the Patient Protection and Affordable Care Act and other applicable federal and state law requirements, and is based on Burnham Benefit’s interpretation of federal guidance in effect as of the date of this publication. To the best of our knowledge, the information provided herein, and assumptions relied on, are reasonable and accurate as of the date of this publication. Furthermore, to ensure compliance with IRS Circular 230, any tax advice contained in this publication is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.

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