On May 19, 2011, in the latest chapter in its efforts to implement the health reform provisions of the Affordable Care Act (ACA), the U.S. Department of Health and Human Services issued the final Rate Increase Disclosure and Review Rule. The HHS rule was published in the Federal Register on May 23, and became effective on July 18. At its core, the rule creates a federal-level review process for health insurance rate increases, and requires insurers to provide justification when they exceed established thresholds. Health insurers and employers must understand what the rule does and does not do, and its interplay with state law, to ensure compliance and minimize its administrative burden.
The rule applies to all health insurance coverage offered in the individual and small group markets. It does not apply to large group coverage. There is considerable interplay between the rule and state law — for example, it relies on respective state law to define a "small group." As with other ACA requirements, it does not apply to coverage provided through a "grandfathered" benefit plan — one that existed before March 29, 2009, and meets other conditions established by HHS under separate rulemaking.
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