On May 14, 2020, CMS released the Final Benefit and Payment Parameters for 2021, along with an accompanying fact sheet. The regulations are primarily directed at health insurers and the marketplace, but include important information that also affects large employers and self-insured group health plans. The effective date is July 13, 2020.

As background, these annual parameters specify the uniform standards for health plans subject to the ACA. Related regulatory and reporting issues are also prescribed. Accordingly, the guidance can serve as a useful planning tool for insurers and employers.

Overall, the 2021 regulations minimize regulatory changes in an effort to promote a more stable and predictable regulatory market. The guidance provides the updated plan cost-sharing limits and addresses the application of prescription drug coupons towards such limits. There are new annual reporting requirements with respect to state mandates for benchmark plans. Other highlights include amendments to the medical loss ratio (MLR) calculation and new notice obligations for non-federal government sponsors of excepted benefit health reimbursement arrangements (EBHRAs).

For 2021, the out-of-pocket maximum applicable to insured and self-funded plans is $8,550 for self-only coverage and $17,100 for family coverage. This limit is distinct from the 2021 IRS out-of-pocket maximum applicable to HSA-compatible high deductible health plans (HDHPs), which is $7,000 for self-only coverage and $14,000 for family coverage.

The guidance also clarifies that, to the extent consistent with state law, plans will be permitted, but not required, to count drug manufacturer coupons or discounts towards enrollees’ annual out-of-pocket limits. (The prior 2020 rule permitted the exclusion of coupons towards the cost-sharing limits only if the drug has a generic equivalent available.) However, the 2021 parameters do not address concerns regarding the applicability of drug coupons to an HSA-compatible HDHP. Accordingly, absent new guidance, these plans should continue to disregard the discounts in determining whether the HDHP statutory deductible has been satisfied.

The ACA requires non-grandfathered health plans in the individual and small group health plans to cover 10 essential health benefits (EHBs). States may require benefits in addition to the EHBs that are incorporated in the state benchmark plans. Beginning in 2021, states will be required to annually notify HHS of any such additional state-required benefits in a form and manner specified by HHS. The change is intended to ensure states are defraying the costs of additional required benefits for those advanced premium tax credits.

In an effort to lower premium amounts, the guidance amends the MLR regulations to require issuers to deduct prescription drug rebates and any other price discounts received by the issuer (or any entity providing pharmacy benefit management services to the issuer) from the incurred claim amount. This change is effective for the 2022 MLR reporting year. Additionally, issuers must report expenses for outsourced services in the same manner as expenses for non-outsourced services, to ensure that the full benefit of prescription drug rebates is reflected in premiums and not offset by outsourcing expenses.

For the benefit of employees, non-federal governmental plan sponsors that offer EBHRAs will now be required to provide a notice that includes the eligibility requirements, annual or lifetime benefit limits, and a summary of benefits generally consistent with ERISA requirements. The notice requirement was designed to ensure that employees received clear information about their excepted benefit offer regardless of whether the arrangement was subject to ERISA.

Employers may find this annual guidance helpful in designing their plan benefit offerings.

HHS Benefit and Payment Parameters Final Rule »
Final Benefit and Payment Parameters Fact Sheet »

Source: NFP BenefitsPartners