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Final Regulations Provide 2015 Payment Parameters, Including Standards for Reinsurance and Risk Corridor Programs

March 14, 2014

HHS Notice of Benefit and Payment Parameters for 2015, 45 CFR Parts 144, 147, 153, 155, 156, and 158, 79 Fed. Reg. 13743 (Mar. 11, 2014); Fact Sheet: HHS 2015 Health Policy Standards Fact Sheet (Mar. 5, 2014)

Final Regulations

Fact Sheet

Visit the Health Care Reform Community on Checkpoint to join the discussion on this development (for Checkpoint subscribers to EBIA’s Health Care Reform manual).

HHS has issued final parameters regulations for 2015 that provide standards and oversight for health care reform’s premium stabilization programs, including the reinsurance and risk corridor programs, which operate only through 2016, and the risk adjustment program, which is permanent. The scope of the final regulations is generally the same as the December 2013 proposed regulations (see our article), with a variety of changes made in response to comments HHS received. Here are highlights:


  • Premium Stabilization Programs. The final regulations include several changes to the transitional reinsurance program, which funds reinsurance in the individual market through fees ($44 per covered life for 2015) assessed on all health insurers and third-party administrators (TPAs) of self-insured group health plans providing major medical coverage. The final regulations also confirm the user fee (96 cents per covered life for 2015) for the permanent risk adjustment program payable by an insurer of a risk adjustment covered plan (generally in the individual or small group market). There are also revised standards for the temporary risk corridor program, which reallocates insurer gains and losses resulting from inaccurate rate setting for qualified health plans (QHPs).
  • Exchange Open Enrollment Period Extended. The 2015 enrollment period for coverage purchased through an Exchange will run from November 15, 2014 to February 15, 2015 (rather than January 15, 2015 as proposed). Coverage will be effective January 1, 2015 only for applications received by December 15, 2014, but open enrollment will continue through February 15, 2015 (with later coverage effective dates). The proposed open enrollment period for years 2016 and beyond has been deleted from the final regulations. Exchange open enrollment in 2015 will begin in November rather than October (as in 2014) to allow for additional rating experience that could possibly reduce 2015 rates in the Exchanges. [EBIA Comment: The final regulations do not provide for any retroactive coverage in connection with the 2015 annual open enrollment period. The preamble also notes that HHS intends to propose for 2015 rules to align the dates for the SHOP annual election periods with open enrollment in individual market Exchanges.]
  • Revised Cost-Sharing Maximums. Based on the methodology set out in the final regulations, revised out-of-pocket maximums for 2015 are provided—$6,600 for self-only coverage and $13,200 for other than self-only coverage (compared to $6,350 and $12,700, respectively, for 2014). The revised maximum deductibles (applicable only in the small-group market) for 2015 are $2,050 for self-only coverage and $4,100 for other than self-only coverage (compared to $2,000 and $4,000, respectively, for 2014). [EBIA Comment: These figures are slightly lower than those proposed due to the use of different rounding conventions—the methodology is unchanged.]
  • Tiered-Composite Premiums Added. The regulations finalize the rule that if a small group insurer offers a composite (average) premium based on the group’s composition when the employer obtains or renews coverage, the insurer must accept the same composite premium for all new enrollees during the year and cannot change the premium based on midyear enrollment changes. The regulations clarify that composite premiums are not mandatory, but insurers offering composite premiums must do so uniformly. They also add a two-tiered composite premium structure for small group market insurers, effective for plan years beginning on or after January 1, 2015. Any rating for tobacco use cannot be included in a composite premium, but must be applied individually. [EBIA Comment: The composite premium rules apply inside and outside of a SHOP, but the option cannot be used in an FF-SHOP when employee choice is offered. States may also adopt different tier-composites with HHS approval.]


EBIA Comment: The regulations finalize technical and actuarial details which are primarily of interest to insurers (including criteria for updating the Actuarial Value Calculator insurers use to determine the value of health plans in the individual and small group markets), but many provisions will interest plan sponsors and their advisors (particularly the reinsurance fee amount for 2015). The preamble includes a massive amount of detail, including a description of numerous rules HHS is considering issuing in the future, notably more standards for Navigators and other Exchange assistance personnel (see our article) and guidance on the interaction of these standards with state laws restricting the Navigator’s role. For more information, see EBIA’s Health Care Reform manual at Sections IX.B (“Cost-Sharing Limitations”), XX (“Mechanisms to Allocate Risk”), XXI (“Exchanges, Qualified Health Plans (QHPs), and CO-OPs”), and XXXVI.I (“Required Contributions Toward Reinsurance Payments”).

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