New Federal Regulation Will Have An Impact on All Health Plans

New Federal Regulation Will Have An Impact on All Health Plans

On April 18, 2019, the federal Department of Health and Human Services (HHS) released its final 2020 Notice of Benefit and Payment Parameters rule.  This regulation is published annually and outlines federal policy changes that will affect private health insurance coverage in the year ahead.  The 2020 payment parameter rule is shorter than in years past and doesn’t contain too many changes that will impact employer-sponsored plans, but these are the critical points to be aware of:

  • This is the latest point in the year that the federal government has ever released a payment rule—usually it is completed in February or March.  Timing is critical because health insurers need the information in the rule to finalize their 2020 products and get them reviewed and approved by state and federal regulators.
  • The formula for determining premium adjustment costs changed. While the new calculation doesn’t affect group health insurance directly, it will reduce the value of premium tax credits for individual-market consumers and indirectly increase consumer cost-sharing requirements across all private-market plan options.
  • The most immediate way the formula change affects people in employer-sponsored plans is that the 2020 Maximum Out-Of-Pocket (MOOP) limit has gone up. In 2020, for all plans, the maximum amount consumers can spend on cost-sharing beyond their premiums will be $8,150 for self-only coverage and $16,300 for anything other than self-only coverage.  This is a 3.16 percent increase from 2019.
  • The change to the premium adjustment formula will also probably affect the way the Department of Treasury sets the annual percentage of family income that an individual can pay for self-only group coverage and have that coverage be “affordable.”  The “affordability” percentage is what applicable large employers use to set their premium contribution rates each year to avoid the employer-shared responsibility provisions (employer mandate) liability.  If the Treasury Department follows HHS’s lead, then the affordability rate for 2020 should be higher than in years past.  We expect to see the affordability percentage released by early June.
  • Finally, some people who take very expensive name-brand pharmaceuticals use drug manufacturer coupons at the pharmacy when they buy their medicine, and other people participate in drug company cost-sharing assistance programs.  In 2020, all non-grandfathered health plans will have the option to exclude the value of those discounts and co-pay assistance from the person’s maximum out-of-pocket limit cost totals, but only if a beneficiary buys certain brand-name drugs instead of a generic equivalent.  If an insured person gets access to a brand-name drug through a coverage appeal, then the issuer must allow coupons or other assistance to count towards cost-sharing limits.

 

By Jessica Waltman, Special Contributor

Jessica Waltman is a health reform strategist, with more than 20 years of experience in health insurance markets and health policy. She is the former Senior Vice President, Government Affairs, for the National Association of Health Underwriters.

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