HHS Finalizes Notice of Benefit and Payment Parameters for 2025

On April 2, 2024, the HHS, CMS, and IRS released the 2025 Notice of Final Benefit and Payment Parameters (the 2025 final rule), an accompanying fact sheet, and, in coordination with the DOL, a related FAQ. The 2025 final rule, which follows a proposed rule issued on November 15, 2023, is primarily directed at health insurers and the ACA marketplace but includes certain information that directly or indirectly impacts group health plans.

Notably, the final rule and FAQ codify that prescription drugs in excess of those covered by a state's benchmark plan are considered essential health benefits (EHBs) and are subject to the applicable ACA out-of-pocket (OOP) maximum and prohibition on annual and lifetime dollar limits, unless the coverage of the drug is mandated by state action such that it would not be considered an EHB.

As background, the ACA requires insurers in the individual and small group markets to offer plans with a comprehensive set of benefits called EHBs. The coverage must include items and services in ten EHB categories, which include prescription drugs. Additionally, all non-grandfathered health plans, including self-insured group health plans and large group market plans, to the extent these plans cover EHBs, must comply with the ACA annual OOP cost-sharing limit and the prohibition on annual and lifetime limits. As a reminder, the 2025 ACA plan annual OOP cost-sharing limits, as specified in prior CMS guidance, are $9,200 for self-only coverage and $18,400 for other than self-only coverage. (The 2024 limits are $9,450 and $18,900, respectively.)

CMS has historically taken the position that prescription drugs covered beyond the minimum EHB-benchmark coverage requirement (unless pursuant to a state mandate) are also EHBs and thus subject to the ACA annual OOP cost-sharing limit and prohibition on annual and lifetime dollar limits. Accordingly, the 2025 final rule formalizes CMS’s position, which was previously informal guidance, for clarification purposes and to promote greater compliance. The 2025 final rule provision applies only to non-grandfathered individual and small group market plans. These plans will need to review their drug plan design immediately and work with their insurers and PBMs (if applicable) to take steps to ensure that drug coverage in excess of its EHB-benchmark plan is also subject to the annual OOP cost-sharing limit and the prohibition on lifetime and annual limits. These plans may also need to review their related policies for compliance, including how drug manufacturer assistance applies towards the plan’s OOP cost-sharing limit.

The 2025 final rule provision does not apply to large group and self-insured plans. However, the FAQ noted that the DOL, HHS, and IRS intend to propose rulemaking that would align the EHB prescription drug requirements for large and self-insured plans with those applicable to individual and small group market plans. In such event, most of the group health plans would be required to treat prescription drugs covered by the plan, including drugs in excess of the applicable EHB-benchmark plan requirements as EHBs for purposes of the ACA annual OOP cost-sharing limit and prohibition on lifetime and annual limits.

Among numerous other changes, the 2025 final rule also removes a prior prohibition against including routine non-pediatric dental services as an EHB. This change will allow states to update their EHB-benchmark plans to include routine non-pediatric dental services effective for benefit years beginning on or after January 1, 2027.

Employers that sponsor group health plans should be aware of the release of the 2025 final rule, which is effective June 4, 2024, and particularly, the provisions regarding the extent to which covered prescription drugs are considered EHBs subject to applicable ACA limits. Employers should also monitor for additional guidance; we will report on relevant developments in future editions of Compliance Corner.

Federal Register: Public Inspection: Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment Parameters for 2025; Updating Section 1332 Waiver Public Notice Procedures; Medicaid; Consumer Operated and Oriented Plan Program; and Basic Health Program »
HHS Notice of Benefit and Payment Parameters for 2025 Final Rule »
DOL FAQ about Affordable Care Act Implementation Part 66 »