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California Sets Standard Deductibles, Copays For Insurance Plans

California on Wednesday became the first state to standardize health insurance plans under the federal health law, which regulators say will make shopping for health insurance easier  when new online marketplaces begin enrolling customers in the fall.

The state has set specific rules governing how much insurers can charge consumers for such things as office visits, drugs or emergency room care.

California builds on the federal law’s requirement that insurance plans be classified as bronze, silver, gold and platinum, based on the scope of their coverage.  In addition to meeting those federal rules, California is requiring insurers to set standardized deductibles and co-payments. That will allow consumers “to make apples to apples comparisons in ways they have not had in the past,” said Peter Lee, executive director of Covered California, the state’s new marketplace.

Under the rules, the most comprehensive policies classified as gold and platinum level coverage  will have no annual deductibles and offer office visits as low as $25.  All silver plans, the moderate-price option, will have $2,000 annual deductibles for individuals, charge $45 for primary care office visits and $250 for using emergency rooms.  Bronze plans, expected to have the lowest premiums, will have $5,000 deductibles for individuals and $70 office visits. Annual family deductibles are double those of individuals.  Consumer cost sharing amounts will be lower for people whose income qualifies them for subsidies.

In announcing the rules, the state also launched its Covered California website,  part of what is expected to be an all-out effort to reach millions of state residents who will be directly affected by the law because they are uninsured, buy their own coverage, or work for a small employer.

The state does not yet have premium information from insurance carriers, but expects to announce those rates in June, Lee said.

But it does have estimates on how much low-and-moderate income Californians will pay if they qualify for a federal subsidy.  Federal law sets that amount based on household income. For a family of four earning $23,550, for example, the monthly payments could be as little as $39 with the federal government picking up the rest of the premium. That same family might see an office visit copayment of as little as $4 because the federal law also includes cost-sharing subsidies for some lower-income Americans, Lee said. California’s rules on plan benefit design ensure that consumers will know “what that is going to buy them,” Lee said.

State lawmakers authorized such standardization in a law creating the state’s new online marketplace, where individuals and small businesses will shop for coverage that goes into effect Jan. 1, 2014.

Other states may go in other directions. Some are likely to allow insurers to develop a wide range of coverage options, so long as they stay within the federal law’s requirements for bronze, silver, gold and platinum plans.  For example, one insurer might have a $30 office visit copayment, while a second may require a $50 co-pay, even though both are silver or bronze-tiered plans.

Lee said he expects residents of every California county will have at least two insurers to choose from.

Updated on Nov. 15 to include pricing for family policies.