Following Benchmark Proposal, HHS Releases List of Largest Small Group Products by State | Practical Law

Following Benchmark Proposal, HHS Releases List of Largest Small Group Products by State | Practical Law

On January 25, 2012, the Department of Health and Human Services (HHS) released informal guidance listing the largest three small group products in each state and the top three nationally available Federal Employee Health Benefit Program plans by enrollment. This information is intended to complement HHS' December 16, 2011 bulletin, which proposed a benchmarking approach for defining essential health benefits.

Following Benchmark Proposal, HHS Releases List of Largest Small Group Products by State

by PLC Employee Benefits & Executive Compensation
Law stated as at 26 Jan 2012 • USA (National/Federal)
On January 25, 2012, the Department of Health and Human Services (HHS) released informal guidance listing the largest three small group products in each state and the top three nationally available Federal Employee Health Benefit Program plans by enrollment. This information is intended to complement HHS' December 16, 2011 bulletin, which proposed a benchmarking approach for defining essential health benefits.
On January 25, 2012, HHS issued informal guidance listing:
  • The products with the three largest enrollments in the small group market in each state.
  • The top three nationally available Federal Employee Health Benefit Program (FEHBP) plans by enrollment. The FEHBP is a government-sponsored benefit program for federal employees.
The guidance is intended to complement the HHS's December 16, 2011 bulletin on essential health benefits (EHBs) under the Affordable Care Act (ACA). In the bulletin, HHS proposed that EHBs be defined using a benchmark approach, under which states would select a benchmark health plan and small group and individual health plans would offer benefits that are "substantially equal" to the selected benchmark plan.
Under the benchmark approach, states may choose one of the following benchmark health plans:
  • The largest plan by enrollment in any of the three largest small group insurance products in the state's small group market.
  • Any of the largest three state employee health benefit plans by enrollment.
  • Any of the largest three national FEHBP plan options by enrollment.
  • The largest insured commercial non-Medicaid health maintenance organization operating in the state.
HHS noted that the lists contained in the informal guidance, which are based on 2011 data, are intended solely for informational purposes and are not an official list of products that will be benchmark options for state consideration. Guidance containing an official list will be released at a later time.

Practical Implications

The informal guidance provides an indication to employers, insurers, states and others of the types of small group products that may be available for determining benchmarks under the HHS's proposed approach for EHBs. The definition of EHBs is especially important for small group coverage, whether offered inside or outside the health insurance exchanges to be operational beginning in 2014 under the ACA. In addition, the definition is significant for the restrictions on lifetime and annual limits for employer-sponsored plans. This latest informal guidance does not indicate when in 2012 HHS's regulations on EHBs can be expected.
For details on HHS's December 16, 2011 bulletin, see Legal Update, HHS Proposes Benchmark Approach for Essential Health Benefits under the ACA.