A wide range of plan choices and cost-sharing options was a vital part of 2014’s initial open enrollment under the Patient Protection and Affordable Care Act (P.L. 111-148; ACA), according to an issue brief just issued by America’s Health Insurance Plans (AHIP). From the four plan categories available, bronze, silver, gold, and platinum, 65% of the eight million individuals who selected a plan chose a silver plan. Silver plans averaged $5,730 for out-of-pocket expenses nationwide, while platinum plans, which were chosen by only five percent of individuals, had an average out-of-pocket limit of $1,855. AHIP adds that many plans have now set their out-of-pocket limits well below required levels.
Improvements in cost-sharing. Under the ACA, all health plans in the individual and group market have maximum out-of-pocket limits. Before these annual limits on cost-sharing went into effect in 2014 ($6,350 for individuals and $12,700 for families, to be increased annually), approximately 12% of individuals with employer-sponsored health plans had no annual limits on cost-sharing, and out-of-pocket spending for prescription drugs often did not count toward the limit for those whose plans provide a cost-sharing limit.
Starting in 2014, the ACA provided another subsidy, besides the premium subsidies for those with incomes between 100% and 400% of the federal poverty level (FPL), to further reduce cost sharing for those with incomes between 100% and 250% of the FPL (for individuals, from $11,670 to $29,175 for 2014). The subsidy comes in the form of reduced cost-sharing plans, which, AHIP advises, are based on the standard silver plans with a 70% actuarial value.
The reduced cost-sharing plans have lower maximum out-of-pocket limits, co-payments, coinsurance, and deductibles. Individuals would be assigned to one of three silver plans based on their income. The average plan for those with the lowest income range ($11,670 to $17,505) had an actuarial value of 94%, with an average out-of-pocket maximum of $1,107.
AHIP says that every major patient organization and consumer group supported the ACA’s annual limit on cost-sharing, including the American Cancer Society Cancer Action Network, the American Heart Association, Georgetown University’s Health Policy Institute, and the Center on Budget and Policy Priorities.
Other ACA provisions. The issue brief summarizes other basic ACA provisions, such as the fact that the law requires all health plans in the individual and small group market to cover essential health benefits (EHB), and explains that states can select among several federally-designated “benchmark” plan options that form the foundation of the EHB package. Further, prescription drugs must be covered in the individual and small group markets, and, under the EHB requirements, the breadth of that coverage is based on the state’s benchmark plan.
A state’s benchmark plan is based on popular private sector group options available in the marketplace. Finally, AHIP states that health plans subject to the EHB requirements generally need an actuarial value of at least 60%, and it quotes a Health Affairs study that found 51% of those enrolled in the individual market prior to the implementation of the ACA had plans with a value below that (AHIP Issue Brief, Patient Cost-Sharing Under the Affordable Care Act, www.ahip.org.).