You probably already know that the Affordable Care Act requires health plans to offer coverage for 10 essential health benefits. You may know, too, that there are exceptions to the rule. But this just out: Starting next year, there’s a new rule which changes the game significantly for self-insuring employers. Let’s take a look.

Certain old exemptions are out the door

It used to be that self-insured, large group, and grandfathered plans were not required to cover essential health benefits. These types of plans existed in a middle ground, where the law left several questions somewhat open-ended.

For example, a plan’s annual limit. To which of the benefits would this apply? Without the essential health benefits requirement, the Federal Register Final Rules allowed exempt parties to take their pick of any of the essential health benefit benchmarks that applied in any State, in the District of Columbia or in the nation’s top three Federal Employee Health Benefit Program plans.

This flexibility was quite obviously a boon to those employers who were in a position to leverage it strategically – such as those who’ve opted for self-insurance in order to control costs overall. As of next January, however, that’s changed.

There is a new rule for self-funded plans

For plans that take effect on or after January 1st, 2017, self-funded groups will be required to select a benchmark plan (bronze, silver, gold or platinum) that specifies exactly which of the benefits they cover are considered essential health benefits, according to CMS.

As you may know, benchmark plans vary on what percentage of medical costs they cover (from 60 to 90 percent, from Bronze to Platinum, respectively). However, the ACA stipulates that plans must not put a dollar limit on essential health benefits.

The new rule, then, introduces significant limits to a playing field that had been quite open, for those who were willing to self-insure. Depending on which of the 2017 benchmark plans a self-funded group selects, how much of the costs they cover, and for which benefits, will be more carefully regulated. Long story short, it’s likely that their plans will end up costing more.

How to navigate the new rule

Despite these developments, self-insurance remains one of the most cost-effective options for group coverage, for a variety of reasons. From flexibility in plan design to greater leverage in rate negotiations, there are many strengths to a well-designed, self-funded plan.

The new rule makes the landscape a bit more complex, but that’s not to say self-funding isn’t still an effective strategy. If you self-insure, or you’re considering it, talk to us about your plan design. We can help you ensure that you’re controlling costs as effectively as possible and protecting your bottom line.

Want to learn more about driving down the high cost of health care? Download our free report, “How to Slash Health Care Costs by 10% or More.”

Leave a Comment