Last week, the MA Division of Insurance (DOI) met with insurers and other interested parties to get technical feedback on proposed standards for Young Adult Plans (YAPs) (working draft regs are available here). We recently found out the DOI has open meetings with insurers and other interested parties every Thursday at 1pm at its offices to discuss health reform related issues. YAPs will be a primary discussion topic for the next few weeks.
DOI envisions YAPs offering individual coverage through short term contracts, each lasting one year. Only residents of Massachusetts 19 thru 26 years old who do not have access to employer-subsidized health insurance will be YAP eligible. DOI is still considering whether young adults who could be covered through employer-subsidized insurance as dependents and those whose employers provides lower than a designated subsidy will be YAP eligible.
The proposed regs give these criteria for YAPs:
• Out of pocket max of $5,000 (subject to the benefit cap).
• Limitation on covered medical expenses of not less than $50,000 per illness or condition per year or $50,000 per year.
• Deductible no greater than $2,000.
• No procedural fee schedule of benefits.
Under Chapter 58, YAPs must cover inpatient and outpatient hospital services, physician services for physical and mental illness, emergency services, and all mandated benefits. The law requires each carrier selling YAPs to offer at least one YAP with drug coverage.
The YAP proposal looks similar to proposed standards for minimum creditable coverage (MCC), without the required pre-deductible preventive care or generic drug coverage and with the addition of the benefit cap. The benefit cap is worrisome – even young people need catastrophic protection. For those unfortunate enough to encounter a severe illness or injury, YAP insurance could cover only a fraction of their costs, leaving them vulnerable to care barriers and financial hardship. Lack of pre-deductible preventive care visits is worrisome. Instead of donut hole coverage provided by MCC plans (front-end preventive and catastrophic coverage), the YAPs are developing as “munchkin coverage” – coverage for services only after the $2K deductible and before the $50K cap.
No date has been set for hearings on the proposed regulations at this time. We will keep you posted.
Eric Benson
