7 min read

What’s in the 2025 payer notice, and how will it change the individual market?

What’s in the 2025 payer notice, and how will it change the individual market?

It’s that time of year again: the Centers for Medicare & Medicaid Services, or CMS, has finalized new rules for 2025. This year, many of the rules further guide the transition to a State-Based Marketplace (Arizona, Georgia, Illinois, Michigan, Mississippi, and Oregon might be interested), with more guidance surrounding essential health benefit nuances right on its heels. Let’s dig in!

Non-pediatric dental benefit restrictions lifted

In an update to Essential Health Benefit (EHB) benchmarks, adult dental could join its pediatric counterpart. As of 2025, if a state feels so inclined, they can choose to add dental as an EHB on all plans. In doing so, states would essentially eliminate many regulatory barriers to dental care and expand access to it across that state.

But on the same note, if a state wants to add dental as an EHB, it cannot continue to sell stand-alone dental plans. States may start this change to their EHB benchmarks in 2025, and plans will reflect these changes in 2027.

The message is clear: dental care is important, and CMS wants to empower states to make it available for their residents if they choose.

Prescription drug changes

Another EHB to get a rework is prescription drug benefit requirements. First, Pharmacy & Therapeutics Committees must have at least one patient representative. This will give the committees insight on how those living with a disease or condition might be affected by the design of a formulary. CMS hopes this will solve some of the consumer challenges related to medications.

Next, CMS will codify the current standing policy surrounding how additional prescription benefits on top of those required as EHBs are handled. In 2025, any prescription drug covered above and beyond what is required will be treated the same as an EHB. They will be subject to the same protections, cost sharing, and restrictions unless the state law says otherwise. This does not apply to large group markets or self-insured plans.

CMS wants to make sure all covered drugs are treated the same way, regardless if the coverage for them is required or not through an EHB. A carrier can no longer allow someone to take a drug, but cover or charge differently simply because it isn’t an EHB.

Mandated does not equal additional

Continuing with EHBs, if a benefit is considered an EHB at the state level, but not at the federal level, it cannot be considered an “additional” benefit. Just like the prescription benefits mentioned above, if the state requires a benefit, it must be held to the same rules, limits, and restrictions as any other EHB.

How to change EHBs at the state level

Three revisions to the benchmark process will make it easier for states to update their EHB standards. Each state will create a set of EHBs that will act as a template for Medicaid, BHPs, and standard health plans. To ensure this template of EHBs is comparable to other local forms of coverage, it will be compared to a typical employer plan in that state. To meet the standard, the plan must meet or exceed the benefits included in the typical employer plan. This will replace the typicality standard that is currently in place, and the generosity standard will be eliminated. Finally, states will no longer have to submit formularies when changing EHBs unless they plan to change that formulary.

All EHB changes send this message: CMS wants EHBs to be simple and dependable. It will be easy for a state to change its EHBs if desired, and those benefits will be found on every level of coverage in that state, regardless if that benefit is provided through public or private coverage.

Chronic condition exception and plan standardization

In the last two years, CMS has been working to standardize options within metal tiers. CMS will continue to tweak these standardizations to ensure plans stay within the actuarial value parameters of each tier. Some plan options, such as enhanced pre-deductible coverage, are key to reducing barriers to access, so CMS wants to maintain their availability.

But, if a plan feels that it cannot function within these standards, an exception process has been finalized, too. If an issuer wants to provide more than two plans in a network type, metal level, or service area, the benefits included must treat a chronic or high-cost condition, and do so at 25% less cost share than a standard plan – including prescription drug benefits. An issuer may also provide more than two in a category if they choose to add dental and/or vision to that plan as a variant.

This, CMS argues, will lessen decision overload for those shopping within metal tiers, without taking away the value plans offer when they try to cater to those with extra needs. Enrollees, theoretically, should no longer have a lengthy, confusing list of plans available to choose from with little difference between plans. The differences they do find should be easy to identify: “This plan is designed to treat someone with heart disease, while this plan is just a standard Silver HMO with dental, and I can see the non-dental option here, too.”

Clarification on SEPs

Regardless of which Marketplace a consumer uses to enroll in a plan during a Special Enrollment Period (SEP), the coverage date will remain the first of the following month. This protects enrollees who might be moving across states with different Marketplaces or other coverage with different termination dates.

States can now choose to offer an SEP to those with an annual household income at or below 150% of the federal poverty level when an advance payment of a premium tax credit is granted. This only used to apply to those whose applicable taxpayer percentage was zero, but now it can apply as long as the household income is below 150% of FPL. It can be made permanent if the state so chooses and will be a great way for individuals to get affordable coverage when they are eligible, instead of having to wait until the next OEP to use their tax credits.

Medicaid eligibility changes on pause

There was a time when CMS toyed with the idea of allowing states more control over what they considered a resource when determining Medicaid eligibility. The intention was for states to feel empowered to allow more individuals to enroll, but some worried the opposite would occur, and states would become more stringent. To work out all the kinks, CMS will continue to figure out how to balance the want for more flexibility with the states’ potential desire to weed more individuals out.

Re-enrollment hierarchy

Those who have catastrophic coverage in 2025, or those who will lose access to it, will be re-enrolled into a QHP most similar to their current plan for the coming plan year. Networks must also be similar, too. If no bronze plan is available, then the lowest coverage level that isn’t catastrophic coverage is used. Essentially, catastrophic plans cannot be re-enrolled in automatically, and the enrollee must elect themselves to be re-enrolled into a catastrophic plan. The same will occur if a plan is no longer available in the next plan year.

Why? CMS is trying to steer individuals away from (what they view as) lackluster catastrophic plans without eliminating them. If a catastrophic enrollee wants to stick with it another plan year, then they have to manually sign themselves up for those plans, making it less easy for someone to float by on these plans until they are no longer eligible.

Basic Health Programs

CMS will allow states with Basic Health plans (BHP), like the Healthy Michigan Plan here in the mitten, to set the first of the month following application as the effective date, regardless of when the individual applies or is found eligible. If states have their own plan in place already, they can submit it for approval. This will help keep gaps in coverage at bay for those who might be exiting a plan and entering a BHP or are approved in one state for a BHP but move to another while that approval is pending.

Verifying Statuses with the Marketplace

Due to cost restrictions and low rate of need, CMS will not require Marketplaces to electronically communicate with incarceration records to verify consumer incarceration status. Consumers can instead attest to their incarceration status without further verification. States may still choose to use electronic verifications with approval.

Medicaid and CHIP statutes are checked using verification software. Marketplaces will now be invoiced and billed monthly for the use of the software.

Notifications on failure to reconcile

File and reconcile processes are solidified across all Marketplaces. If a consumer fails to provide documentation proving them eligible for their premium tax credits, the Marketplace must send notice to that consumer and give them one year to reconcile before they can rescind those tax credits. This will ensure that fewer consumers have their tax credits unduly removed. Of course, this does not relieve the consumer of the requirement to provide this documentation or properly document their taxes, it just gives them more time to provide it if they fail to do so. Hopefully, fewer people will be dropped from coverage for paperwork snafus, and less churn will result overall.

Time and Distance standards equal for all market types

Those states not participating in the Federal-facilitated Marketplace (FFM) must adhere to the same time and distance standards that are adhered to by the FFM. This does not affect us here in Michigan, so nothing to do here unless you are licensed in a state that uses a State Marketplace or a State-based Marketplace. And if you are, that just means that for a plan to continue to be considered a Qualified Health Plan (QHP) in those marketplaces, it must offer providers that are close enough and timely enough for an enrollee to reasonably attend as determined at the county level. Stand-alone dental plans are absolved of this requirement.

Marketplace transition rules

If a state is choosing to move from the FFM to a state-based Marketplace, it must operate for one year as a State-based Marketplace with Federal Platform before fully transitioning from the FFM. This gives the state plenty of time to work out all the kinks before the training wheels come off.

States that do operate their own Marketplace must operate a centralized eligibility and enrollment platform. This makes it easier for those using the Marketplace to enroll in coverage and doesn’t allow for entities like web brokers or issuers to determine eligibility, even if the consumer enrolls with them.

Other miscellaneous Marketplace rules: Marketplaces must have an uninterrupted 11 week open enrollment period, spanning from Nov 1 to Jan 15 unless grandfathered in otherwise.

CMS is looking to make the shopping experience easier and feels that standardizing the way information is displayed will help here. Minimum standards have been established regarding how plan details are displayed in web-broker websites that work with the Marketplace. Direct enrollment entities must display changes to their websites in the same way that Healthcare.gov does.

Call Centers

All Marketplace call centers must provide access to a live representative during their business hours. Additionally, they must be able to provide consumers information on their APTC and cost-sharing reduction (CSR) eligibility, help consumers understand their QHP options, facilitate comparison of QHPs, and help submit QHP enrollment applications to the Marketplace.  

What does this mean for us, the agents?

Many of the rules listed here will not affect your day-to-day business—either because they are rules already set in place here in Michigan, such as the time and duration of Open Enrollment, or they affect aspects of the Marketplace that are too high level.

Three main points to keep in mind: Michigan might wind up interested in adding dental as an EHB, making stand-alone dental plans a thing of the past. If that happens, you’ll want to be ahead of that news before the plans drop on the Marketplace. Secondly, the small but numerous quality of life changes might add up to something good for your business. Last but not least, check up on any of your clients who might have a catastrophic plan and make sure they are happy with the coverage they will be cross-walked into.

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