Washington DC - Capitol Hill: United States Ca...
Washington DC – Capitol Hill: United States Capitol – East front (Photo credit: wallyg)

The department of health and Human Services released guidance on two key components that will affect the level of protection a private insurance policy will provide under health care reform.

1st  Involves the services the insurance policy must cover

2nd  Involves how much the insured must pay for out of pocket services.

The services that must be covered are called the Essential Benefits.

10 categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.

Originally HHS was supposed to specify these benefits Instead they have left it up to each state to decide. They have offered guidance which allows flexibility on how a state defines what has to be covered.  The federal Government is using “Actuarial Value” to determine the plan overages.

An example of Actuarial Value, is a plan with an actuarial value of 70% would be expected to cover on average 70% of health care expenses, with enrollees paying the remaining 30% through some combination of deductibles, copays, and coinsurance.

The Federal Guidance indicates that the actuarial values will be determined by a standard calculator developed by the Federal government.

There can be a wide variation in plan designs that have the same actuarial value.  This gives some hope to Indianapolis resident about having plan choice under health care reform.