In 2017, the ACA will allow states to sell large group health plans through the exchange operating within that state. For example, Covered California will be able to sell fully-insured large group health plans under the state operating insurance marketplace. Currently, large group health plans do not have to abide by the same policies established for small group health plans because Congress feared that it would actually mean more cost to individuals covered by large group insurers. Since most large businesses pay an average of 60% of the cost of their employee’s coverage, large group insurers were not subject to the same rules and regulations of small group plans. If the large group policies were held to to same standards as the small group policies, they would have to include:
- Adjusted community premium rating rules
- A “metal level” system
- Minimum essential benefits
- Employees covered under a large group plan with a specified insurance company would likely be part of that insurer’s risk pool
The premium rating rule states that there can’t be any significant changes to rates for insurance based on an employee’s health. The rates can only be determined by age but must comply with a 3 to 1 ratio. The rates can also differ for tobacco users. States are allowed to establish single vs. family rates in different areas (known as the adjusted community premium rating rules). This rule was not regulated for large group health plans because Congress believed that large groups could still function without adjusted rates.
Essential health benefits must meet minimum standards of care. According to the ACA, an essential health benefits package must provide essential health benefits, limit cost sharing, and provide a certain level of coverage determined by the value of benefits within the plan (this is also known as the metal level requirement). These rules did not impact large group insurance coverage because it may have meant higher cost of premiums for the employer which could have resulted in employers paying a lower percentage of coverage for their employees (thus employees would be paying more for their benefits when the ACA is supposed to help them pay less).
In 2017, large group insurance plans purchased on and off the exchange may be subject to the same rules and regulations established under the ACA for small businesses. It’s important that large group employers keep an eye on state and federal decisions regarding the sale of large group insurance coverage and required benefits.