Obama Administration Says Health Plans Must Cover Hospitalization
On Tuesday, HHS and the Department of Treasury released a notice clarifying that large employers with health plans that do not offer "substantial coverage for inpatient hospitalization services" do not comply with the Affordable Care Act's minimum coverage standards, Kaiser Health News reports (Hancock, Kaiser Health News, 11/4).
The agencies said, "A plan that fails to provide substantial coverage for these services would fail to offer fundamental benefits that are nearly universally covered and historically have been considered integral to coverage under typical employer-sponsored group health plans" (Herman, Modern Healthcare, 11/4).
For plans to meet the ACA's minimum coverage standard, employers must cover at least 60% of anticipated medical costs. Large employers that do not offer employees a plan that meets the ACA's minimum coverage standards are subject to potential fines of up to $3,120 per employee, according to KHN.
To determine whether plans meet ACA standards, employers use an online federal calculator.
However, consumer advocates have said that a glitch in HHS' minimum-value online calculator appeared to be letting companies that were enrolling employees in coverage for 2015 provide less-costly health plans with substandard coverage while avoiding penalties under the ACA. Such plans lack certain benefits, such as hospitalization coverage (Kaiser Health News, 11/4).
Exemptions for Some Employers, Workers
HHS and Treasury said employers that have already begun enrolling employees in plans without substantial coverage for inpatient hospitalization services or had binding contracts to offer such plans prior to Nov. 4 will receive a temporary exemption from the minimum coverage standards as long as all health plans that begin after March 1, 2015, meet the updated standards (Modern Healthcare, 11/4).
In addition, the agencies said employees who are only offered plans without substantial coverage for inpatient hospitalization services would be allowed to receive insurance subsidies to purchase coverage through the ACA's insurance exchanges. According to KHN, employees who are offered plans that meet the ACA's minimum coverage requirements are typically not eligible for the subsidies (Kaiser Health News, 11/4).
HHS and Treasury said they expected to release final regulations on the minimum coverage standards and inpatient hospitalization services on or around March 1, 2015, according to Modern Healthcare.
Federation of American Hospitals CEO Chip Kahn and American Hospital Association CEO Rich Umbdenstock praised the change. Specifically, Umbdenstock said the new guidance was needed and aligned the administration's policy with the ACA's goal "to protect all Americans from receiving substandard health insurance coverage that leaves them vulnerable to poor health outcomes and potentially disastrous financial stress" (Modern Healthcare, 11/4).
Similarly, Edward Lenz, senior counsel for the American Staffing Association, added that the proposal is "a very positive, constructive, sensible step" that would help ensure "that everybody's going to be held harmless," including employers who already committed to plans without substantial inpatient hospitalization coverage and employees who want to purchase plans off the exchanges.
However, Kevin Schlotman, director of benefits at Benovation, said, "The last-minute rule change is problematic." He said that "employers are searching for a solution that permits them to comply while at the same time doesn't burden the business with hundreds of thousands in expenses they have never had in the past" (Kaiser Health News, 11/4).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.