OFFICE OF FISCAL ANALYSIS
Legislative Office Building, Room 5200
Hartford, CT 06106 ↓ (860) 240-0200
April 18, 2013
To Fiscal Note on
sHB-6320, File No. 14
The original fiscal note states there was no fiscal impact to the state. However, there is a fiscal impact to the state and grandfathered municipal health plans pursuant to the Patient and Protection Affordable Care Act (PPACA), as the coverage required in the bill will be a new coverage mandate. The original fiscal note correctly states, there is no fiscal impact to the state employee and retiree health plan.
Municipal Health Plans
Many municipal health plans are recognized as “grandfathered” health plans under the PPACA.1 It is unclear what effect the adoption of certain health mandates will have on the grandfathered status of certain municipal plans under PPACA.2
The State and PPACA
Lastly, PPACA requires that, effective January 1, 2014, all states must establish a health benefit exchange, which will offer qualified health plans that must include a federally defined essential health benefits package (EHB). The federal government is allowing states to choose a benchmark plan to serve as the EHB until 2016 when the federal government is anticipated to revisit the EHB.
While states are allowed to mandate benefits in excess of the EHB, the federal law requires the state to defray the cost of any such additional mandated benefits for all plans sold in the exchange. The extent of these costs will ultimately depend on the mandates included in the federal essential benefit package, which have not yet been determined. State mandated benefits enacted after December 31, 2011 cannot be considered part of the EHB for 2014-2015 unless they are already part of the benchmark plan3. However, neither the agency nor the mechanism for the state to pay these costs has been established.
1 Grandfathered plans include most group insurance plans and some individual health plans created or purchased on or before March 23, 2010.
2 According to the PPACA, compared to the plans' policies as of March 23, 2010, grandfathered plans who make any of the following changes within a certain margin may lose their grandfathered status: 1) Significantly cut or reduce benefits, 2) Raise co-insurance charges, 3) Significantly raise co-payment charges, 4) Significantly raise deductibles, 5) Significantly lower employer contributions, and 5) Add or tighten annual limits on what insurer pays. (www.healthcare.gov)
3 Source: Dept. of Health and Human Services. Frequently Asked Questions on Essential Health Benefits Bulletin (February 21, 2012).