HHS has released final regulations that include the benefit and payment parameters for 2018, as well as final regulations on a variety of Exchange and Small Business Health Options Program (SHOP) standards, insurance market reforms, and consumer operated and oriented plans (CO-OPs). Although primarily focused on risk stabilization rules for insurers, the wide-ranging package of final regulations, most of which were proposed in September, includes guidance that may be of interest to employers and their health plan advisors. Here are highlights:

• Increased Annual Cost-Sharing Limits. HHS has increased the maximum annual limitation on cost-sharing for 2018 to $7,350 for individual coverage and $14,700 for family coverage (compared to $7,150 and $14,300, respectively, for 2017).
• Standardized HDHP Coverage. For 2018, HHS has added an Exchange standardized plan option at the bronze level of coverage that qualifies as an HSA-eligible high-deductible health plan (HDHP). HHS did not add standardized HDHP options at other levels of coverage, but may do so in the future if there is significant demand. (The preamble emphasizes that insurers are not required to offer the standardized options, which are designed to be similar to the most popular qualified health plans in the federal Exchange, but HHS believes these options can simplify the consumer shopping experience.)
• Modified SHOP Enrollment Rules. The regulations finalize the rule that qualified employers in a federal SHOP or a state SHOP using the federal platform (FF-SHOP) are required to notify the FF-SHOP about a newly qualified employee on or before the 30th day after the day that the employee becomes eligible for coverage. (The FF-SHOP must provide employees with a 30-day enrollment period starting on the date the employer provides notice.) The FF-SHOP coverage effective date for a newly qualified employee will be the first day of the month following the plan selection, unless the employee is subject to a waiting period. However, in a modification from the proposed rule, if a newly qualified employee makes a plan selection on the first day of a month and any applicable waiting period has ended by that date, coverage must be effective on the first day of the following month. Employers cannot use initial measurement periods exceeding ten months when determining eligibility of new variable-hour employees. Waiting periods in FF-SHOPs cannot exceed 60 days, calculated beginning on the date the employee becomes eligible, regardless of when the qualified employer notifies the SHOP about the newly qualified employee. Also, to promote transparency, stability, and appropriate utilization of special enrollment periods and generally align the special enrollment periods (SEPs) in SHOPs with those in the individual Exchanges, the final regulations codify several SEPs that were made available through prior guidance.
• Exchange Administration Provisions. The final regulations codify prior interim guidance allowing Exchanges to use paper-based processes to handle employers’ appeals of determinations regarding their employees’ receipt of premium tax credits. Subject to other federal or state laws, the regulations generally provide that required SHOP notices must be sent electronically, unless an employer or employee elects to receive notices through standard mail. Effective for plan years beginning on or after January 1, 2018, HHS is removing the requirement for certain insurers offering qualified health plans in a state’s individual market through a federal Exchange to also offer plans in the state’s FF-SHOP, concluding that an insurer’s decision to participate in the FF-SHOP should be independent of its decision to participate in the individual Exchange.
• Revised Insurance Market Reforms. In addition to finalizing rules to prop up the risk adjustment program by, e.g., incorporating adjustments for health risks of partial-year enrollees, the regulations clarify and revise a number of other insurance market requirements, including revisions to the guaranteed-renewability rules that reduce instances where certain insurers may inadvertently trigger a five-year prohibition on re-entering a market. An expansion to the medical loss ratio (MLR) rules beginning in 2018 permits insurers with a large percentage of newly issued policies to defer reporting of the newly issued policies that have a full 12 months of experience in that MLR reporting year (in addition to newly issued policies with less than 12 months of experience as allowed by existing rules). Insurers can also limit their total MLR rebate liability payable for a calendar year in certain situations. In addition, the regulations finalize the proposed updates to the child age-rating bands in the small group market, starting in 2018.
• Changes for Struggling CO-OPs. The regulations also finalize interim final regulations issued in May 2016 that make a number of changes to the rules governing CO-OPs in order to provide additional flexibility for funding and governance. The final regulations do not implement any clarifications or changes with regard to the sale or conversion of policies to a for-profit or non-CO-OP issuer in connection with the wind down of a CO-OP.

Comment: Insurers subject to market reforms and those participating in or affected by Exchanges or SHOPs will want to study the details in these final regulations. Insurers will also be interested in the 2018 Letter to Issuers in the Federally-Facilitated Marketplace and the Final 2018 Actuarial Value Calculator Methodology Although the parameters and other rules were finalized before the end of the year, their ultimate application in 2018 is uncertain, depending on changes to health care reform under the Trump administration.