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States to get more flexibility in health insurance plan design
By Insure.com staff

The Obama administration says it will give states more flexibility in determining which benefits must be included in health insurance plans offered to individuals and small groups in 2014.

The U.S. Department of Health and Human Services issued a bulletin Dec. 16 describing a proposed approach for how it will set rules for defining essential benefits.

The information comes as states move toward establishing health insurance exchanges -- marketplaces where individuals and small groups can purchase coverage in 2014. The 2010 Patient Protection and Affordable Care Act requires individual and small-group plans sold inside and outside the exchanges to offer a comprehensive package of items and services, known as "essential health benefits."

Under the department's proposed approach, states would have the flexibility to select an existing health plan to set the "benchmark" for the items and services included in the essential health benefits package. States would choose one of the following health insurance plans as a benchmark:

  • One of the three largest small group plans in the state

  • One of the three largest state employee health plans

  • One of the three largest federal employee health plan options

  • The largest HMO plan offered in the state's commercial market.

The benefits and services included in the health insurance plan selected by the state would be the essential health benefits package. Plans could modify coverage within a benefit category so long as they do not reduce the value of coverage. Consistent with the law, states must ensure the essential health benefits package covers items and services in at least 10 categories of care, including preventive care, emergency services, maternity care, hospital and physician services, and prescription drugs.

If a state selects a plan that does not cover all 10 categories of care, the state will have the option to examine other benchmark insurance plans, including the Federal Employee Health Benefits Plan, to determine the type of benefits that will be included in the essential health benefits package.

Janet Trautwein, CEO of the National Association of Health Underwriters, said in a prepared statement that her organization was encouraged by the general guidance, but eager for more details, including the list of treatments that every policy must cover at a bare minimum.

"Health insurance agents and brokers work well in advance with their employer clients on designing a health plan. Detailed and timely information will greatly benefit this process so that individuals and families are able to obtain health coverage that is affordable and best suits their particular needs," she said.

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