Proposed Rules Issued on Guaranteed Coverage, Essential Benefits and Wellness Incentives

News Updates

The Obama administration issued three new proposed rules to implement provisions in the Patient Protection and Affordable Care Act (PPACA).

The rules, released on Nov. 20, 2012, and published in the Federal Register on Nov. 26, pertain to guaranteed issuance of coverage regardless of pre-existing conditions; essential health benefits that nongrandfathered plans in the individual and small group markets will be required to cover; and an increase in maximum allowable wellness program incentives.

These three proposed rules have been anticipated. Their key points are described below:

Under the rule, insurance companies would be allowed to vary premiums within limits, only based on age, tobacco use, family size and geography. Health insurance companies would be prohibited from denying coverage to any American because of a pre-existing condition or from charging higher premiums to certain enrollees because of their current or past health problems, gender, occupation, and small employer size or industry.

The proposed rule also would implement the PPACA's policies related to fair health insurance premiums, risk pools and nongroup market catastrophic plans.

Regarding catastrophic plans, the PPACA limits deductibles for nongrandfathered plans in the small group market at $2,000 for individuals and $4,000 for families, effective Jan. 1, 2014. However, insurers are permitted to sell nongroup catastrophic plans with higher deductibles to those who are under the age of 30 or for whom coverage would otherwise be unaffordable.

Comments on this rule are being accepted by the U.S. Department of Health and Human Services (HHS) through Dec. 26, 2012.

Essential health benefits (EHBs) are a core set of benefits intended to give consumers a consistent way to compare health plans in the individual and small group markets. Beginning in 2014, all nongrandfathered health insurance coverage in the individual and small group markets will be required to cover EHBs, which include items and services in 10 statutory benefit categories, such as hospitalization, prescription drugs, and maternity and newborn care, and are equal in scope to a typical employer health plan. In addition to offering EHBs, these health plans will meet specific actuarial values.

This proposed rule also outlines health exchange and issuer standards related to coverage of EHBs and actuarial value, and proposes a timeline for qualified health plans to be accredited in federally facilitated exchanges.

Comments on this rule are being accepted by HHS through Dec. 26, 2012.

This rule would increase the maximum permissible reward under a health-contingent wellness program offered in connection with a group health plan (and any related health insurance coverage) from 20 percent to 30 percent of the cost of coverage. It would further increase the maximum permissible reward to 50 percent for wellness programs designed to prevent or reduce tobacco use.

The rule includes 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.

The eventual increase in allowable employee wellness incentives was viewed as the most beneficial element of the PPACA in a 2011 survey of U.S. employers.

Comments on this rule are being accepted by the U.S. Department of Labor through Jan. 25, 2013. 

Stephen Miller, CEBS, is an online editor/manager for SHRM. To read the original article, please click here.