Friday, January 16, 2015

FAQ - Calculation of member months for the Cost-Sharing Reductions Reconciliation simplified methodology

Q. On November 21, 2014, HHS clarified that a plan benefit year could begin as late as March
31, 2014 for the purpose of establishing member months to meet the credibility threshold
required by the cost-sharing reduction reconciliation simplified methodology. Does the new
March 31, 2014 deadline include people who applied or tried to apply by March 31, 2014, but
whose enrollments were not effectuated?

A: Yes. A Qualified Health Plan issuer assessing whether enrollment meets the credibility
threshold for the simplified methodology may count members who applied or tried to apply by
March 31, 2014, but whose enrollment did not become effective until later because of technology
challenges. This includes members whose applications were not processed until after March 31,
2014, postponing their start date until May, and members who received a special enrollment
period because Exchange issues prevented them from filing an application by March 31, 2014.

The cost-sharing reduction reconciliation simplified methodology provided in 45 CFR
156.430(c)(4) allows issuers to develop a set of effective cost-sharing parameters based on the
average experience of enrollees in a standard plan. HHS in 45 CFR 156.430(c)(4)(v) set a
minimum of 12,000 member months per benefit year in the standard plan to establish a credible
claims data base on which to measure cost-sharing parameters.

Because of 2014 enrollment delays, we will consider this standard met if at least 12,000 member
months are accumulated for enrollees, each of whom applied or tried to apply to the plan
beginning no later than March 31, 2014 and remained in the plan until the end of the benefit year
on December 31, 2014. This includes members who received special enrollment periods that
resulted in an effective date up to but not later than May 31, 2014.

Issuers that selected the simplified methodology but do not meet the foregoing 12,000-member
month credibility standard must use the Actuarial Value simplified methodology described at 45
CFR 156.430 (c)(4) (v).

 FAQ - January 13, 2015