What Are Standardized Health Insurance Plans?

Get familiar with your exchange options

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If you buy your own health insurance, you might have heard of standardized plans, depending on where you live. Several of the state-run health insurance exchanges offer standardized plans to some degree. Standardized plans were also available through HealthCare.gov (the exchange used by the majority of the states) in 2017 and 2018. But the federal government stopped creating standardized plan designs as of 2019, opting instead to let insurers design all of their own plans within the general parameters that apply all qualified health plans.

How Does Standardization Work?

Plan standardization is just what it sounds like. Guidelines are laid out in terms of specific coverage details, and all standardized plans must offer the same coverage for those aspects of the plan.

Healthcare.gov rolled out standardized plans (called Simple Choice plans) as of 2017. Participation in the Simple Choice program was optional for insurers, although they were encouraged to submit standardized plans for sale in the exchange. However, the federal government only issued standardized plan parameters for two years (2017 and 2018) and is no longer taking a role in creating standardized plans. But several state-run exchanges, discussed below, still have their own standardized plan designs.

When the Department of Health and Human Services published the Benefit and Payment Parameters for 2017, they laid out the details for the six standardized plan designs that carriers would be able to offer through HealthCare.gov (details are on page 309 of the Benefit and Payment Parameters). As much as possible, HHS worked to keep the standardized plan designs similar to the plans that were already offered in 2015.

For insurers that used the federally-facilitated exchange (ie, Healthcare.gov), there was a standardized plan design for each of the bronze, silver, and gold metal levels, plus three additional standardized plan designs at the silver level for people who qualified for cost-sharing subsidies.

For the standardized Simple Choice plans, many aspects of the coverage were the same regardless of which health insurance carrier offered the plan. For example, all standardized silver plans in the federally-run exchange in 2017 had $3,500 deductibles, $30 primary care office visit copays, and $15/$50/$100 copays for generic/preferred brand name/non-preferred brand name drugs (coinsurance for specialty drugs was set at 40 percent for standardized silver plans).

When consumers logged onto Healthcare.gov to shop for 2017 and 2018 plans, they saw the Simple Choice plans displayed prominently among the available options; the federally-run exchange had committed to making it easy for people to determine which plans were standardized and which were not.

But in the Benefit and Payment Parameters for 2019, HHS noted that in an effort to "maximize innovation by issuers in designing and offering a wide range of plans to consumers," the federal government would no longer define any specific parameters for standardized plans (in other words, there would no longer be a standardized plan design at the federal level) and would no longer differentially display standardized plans when consumers shopped for plans on HealthCare.gov.

Weren't Health Plans Already Standardized?

The Affordable Care Act already brought a certain degree of standardization to the individual health insurance market, with the introduction of metal-level classifications for health plans. All individual health insurance plans with effective dates of January 2014 or later—including plans sold outside the exchanges—must fit into either a metal-level classification or be a catastrophic plan

Because all new health plans are either bronze, silver, gold, platinum, or catastrophic, it's easier for consumers to compare apples to apples than it was prior to 2014. But the metal-level classifications are determined based on the actuarial value (AV) of the plan. And that's not a measure that tends to mean much to individual consumers. Bronze plans have AV of 60 percent (it's actually a range, from 56 percent to 65 percent; there's a -4/+5 de minimus range that applies to bronze plans; all other metal levels have a -4/+2 de minimus range), silver plans have an AV of 70 percent, gold plans have an AV of 80 percent, and platinum plans have an AV of 90 percent.

So a silver plan can be expected to pay roughly 70 percent of total health care costs for an entire standard population. But that's an average, including people who have very little healthcare spending, along with people who might need a million dollars worth of care during the year.

The person with very little healthcare spending might pay for most or all of her own care during the year, depending on her plan structure (ie, if she has a $3,000 deductible and only uses $1,000 worth of healthcare to which the deductible applies, she'd pay the full cost herself). On the other hand, a person whose healthcare costs reach a million dollars during the year will only pay a tiny fraction of her own costs, since her health plan will pay 100 percent of her costs after she hits the out-of-pocket maximum for her plan.

Although plans within the same metal level have roughly the same AV, the coverage specifics can vary considerably from one plan to another. For example, it's common to see silver plans with deductibles that range from $2,000 to $7,000. Some have copays for office visits, while others do not. Some have the highest out-of-pocket exposure allowed, while others have lower out-of-pocket caps. In short, there are many different ways that a plan can achieve an AV within one of the ranges set for metal-level plans.

So although consumers who narrow their search to a single metal level will be comparing plans that all offer similar overall value, they may still find that the plan comparison process can be overwhelming, particularly in states that have numerous health insurance carriers participating in the exchange.

In states that use them, standardized plan designs are an effort to make the plan comparison process more intuitive, and to reduce the prevalence of discriminatory plan designs.

States That Have Standardized Plans

Several states either require or encourage insurers to offer standardized plans in their exchanges. HealthCare.gov no longer offers an option to differentially display any sort of standardized plan, but if a state runs its own exchange (ie, it doesn't use HealthCare.gov), the exchange can highlight standardized plans when consumers are shopping for coverage.

The plan designs vary from state to state, but the overall focus is on keeping deductibles, copays, coinsurance, and total out-of-pocket costs identical across all standardized plans at a given coverage level. So for example, all standardized silver plans in Oregon's exchange have $2,850 individual deductibles in 2019 and $35 primary care office visit copays. [Oregon currently uses HealthCare.gov, although the state is considering a possible switch to its own exchange platform in the future.]

Many of the standardized plan designs cover outpatient care with copays, rather than applying it towards the deductible. Most states with standardized plan designs also allow carriers to offer non-standardized plans as well:

  • In California, the exchange only allows carriers to offer standardized plans.Covered California—the state-run exchange—does not allow non-standardized plans to be sold, and was very much in support of the introduction of standardized plans in states that use Healthcare.gov instead of running their own exchanges. 
  • New York requires health insurers to offer at least one standardized plan at each metal level, although insurers are also allowed to offer up to three non-standardized plans. More than two-thirds of the people who enrolled through New York State of Health in 2019 selected standardized plans.
  • Massachusetts introduced standardized individual health insurance plans in 2010, and they continue to be available through the state-run exchange, Massachusetts Health Connector. But carriers selling plans in the Massachusetts exchange also have the option of offering non-standardized plans.
  • In the District of Columbia, the exchange—DC Health Link—introduced standardized plans in 2016 (the 2019 plan designs are available here), but carriers have quite a bit of flexibility to offer non-standardized plans aswell. The exchange only requires a carrier to offer the standardized plan at any metal level for which the carrier is offering plans. 
  • Connecticut's exchange—Access Health CT—requires carriers to offer at least one standardized gold plan, at least one standardized silver plan (which must be the lowest-cost silver plan the carrier offers), and at least two standardized bronze plans, one of which must be HSA-compatible. Carriers are not allowed to implement gatekeeper requirements for their standardized plans; enrollees must be allowed to visit specialists without a referral from a primary care physician. As long as carriers meet the standardized plan requirements, they can also offer up to two non-standardized platinum plans, and up to three non-standardized plans at each of the bronze and gold categories.
  • Oregon initially had a fully state-run exchange, but now uses Healthcare.gov as its enrollment platform—although they're considering switching back to their own enrollment platform. The state created standardized plans in the bronze, silver, and gold categories, but insurers offering coverage in the exchange can also offer up to two non-standardized plans and two "innovative" plans in each coverage level.
  • Vermont's state-run exchange, Vermont Health Connect, has standardized bronze, silver, gold, and platinum plans, plus additional standardized plans at the bronze and silver level that are HSA-compatible. The two carriers in the state's exchange also offer non-standardized plan options.

Although some critics contend that standardized plans stifle innovation in the health insurance market, it's worth noting that nearly all of the state-run exchanges that already have mandatory standardized plans also allow carriers to sell non-standardized plans. 

How Do Standardized Plans Differ From One Another?

Although standardized plans make apples-to-apples comparisons much easier, you still have to pay attention to the plan details. Plans can differ from one another in areas that aren't specifically addressed by the plan standardization guidelines. Provider networks and formularies (covered drug lists) will also differ considerably from one plan to another.

So for example, if you're in a state with standardized plans and you're comparing three standardized silver plans that all have the same out-of-pocket costs for prescription drugs, you'll need to look at the formularies for each company to determine whether they cover a specific drug you need, and if so, which prescription tier applies.

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Article Sources

  1. Federal Register. Department of Health and Human Services. Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2019. April 17, 2018.

  2. Oregon Department of Financial Regulation. Oregon standardized health plans: Summary of Coverage (2019 plan year).

  3. State of Oregon. Department of Consumer and Business Services, Oregon Health Insurance Marketplace. Request for Information: State-Based Marketplace Technology Platform and Consumer Assistance Center. April 5, 2019.

  4. Lee, Peter, Executive Director of Covered California. Covered California comments on Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2017; CMS-9937-P (RIN 0938-AS57). December 2015.

  5. New York State of Health. 2019 Open Enrollment Report. May 2019.

  6. Brice, Emily (Deputy Chief of Policy and Strategy); Dawley, Maria Joy (Senior Product Manager, Health and Dental Plans); Boucher Calvao, Edith (Actuary). Massachusetts Health Connector. 2020 Health and Dental Plan Proposed Seal of Approval (SOA). March 14, 2019. 

  7. DC Health Link. Carrier Reference Manual, 2019.

  8. Access Health CT. Solicitation to Health Plan Issuers for Participation in the Individual and/or Small Business Health Options Program (SHOP) Marketplaces Plan Year 2020. May 2019

  9. Vermont Health Connect. Vermont Health Connect 2019 Plan Designs & Monthly Premiums (before subsidy).