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CCH® BENEFITS — 04/26/11

Insureds In ACA Health Insurance Exchanges May Face Disparate Cost-Sharing

from Spencer’s Benefits Reports: Beginning in 2014, individuals covered in health insurance exchanges provided under the Patient Protection and Affordable Care Act (ACA) could face substantially varied cost-sharing structures across plans in the same tier, a study for the Kaiser Family Foundation (KFF) revealed.

The ACA provides for state-based health insurance exchanges to offer plans in four coverage levels based on actuarial value. Those four levels, and their required actuarial values, are as follows:

• Bronze—60%;
• Silver—70%;
• Gold—80%; and
• Platinum—90%.

The plans face maximum out-of-pocket limits based on health savings account (HSA)-qualified high deductible health plans (HDHPs). Yet, the cost-sharing structure in these plans could still vary among plans, for example with a higher deductible paired with a lower coinsurance percentage.

Applying the same parameters KFF provided to make their separate calculations, the Actuarial Research Corporation, Aon Hewitt, and Towers Watson estimated potential cost-sharing for insureds in the exchanges. Based on the study, KFF reached the following conclusions:

• The substantial variation in the estimates suggests that terms of coverage could vary widely across insurers and make consumer comparison shopping challenging. The degree of variation will depend on the rate of competition in an insurance market, and how much standardization federal policymakers and states require in implementing the ACA’s actuarial value thresholds, KFF noted.
• Individuals enrolled in bronze-level plans could be required to meet deductibles ranging from $2,750 for single coverage with 30% coinsurance once the deductible is met to $6,350 with no coinsurance, while estimates of deductibles for those covered in a silver plan range from $1,850 to $4,200 for single coverage, with 20% coinsurance required above the deductible in all cases. Family deductibles could be twice those amounts.
• According to all three estimates, the bronze and silver plans would have deductibles high enough to qualify as HDHPs that allow enrollees to contribute to an HSA.
• Although currently deductibles are typically high in the nongroup health insurance market, the ACA will improve coverage in several ways, including eliminating of health status-based denial of coverage or rate surcharges, providing access to preventive services with no patient cost-sharing, and implementing a required set of covered services.

According to KFF, this analysis “allows people to come to their own judgments about key questions regarding the appropriateness of the coverage provided for in the ACA, such as the following:

• “Does the minimum level of coverage required (a bronze plan) strike the right balance between providing a sufficient level of protection for people and establishing a floor for coverage that is affordable and not too disruptive relative to the insurance people are buying today?
• “Will the cost sharing be affordable for low and moderate income people who qualify for subsidies?
• “Will people perceive themselves as better off under reform than the status quo?”

With substantial variation in the exchanges’ actual coverage, “the exchanges could play an important role in helping consumers understand their choices by, for example, providing online tools to estimate their out-of-pocket costs,” the KFF analysis concluded.

For a copy of the report, Focus in Health Reform: What the Actuarial Values in the Affordable Care Act Mean, visit http://www.kff.org/healthreform/8177.cfm.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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