Benefit Design and Affordability

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The Massachusetts Connector Board was forced to grapple with both affordability standards and benefit design in the context of the Commonwealth’s individual mandate. Massachusetts based their affordability standard on income, premiums, age, and geographic location. They then set minimum creditable coverage standards to ensure that individuals have adequate coverage.[i]

Many advocates have argued that an affordability standard should include out-of-pocket costs like deductibles, coinsurance levels, and co-payments. There is considerable debate about the appropriate levels for the cost of these variables but, in general, there is agreement that levels of both premium and out-of-pocket costs should be related to income and the ability to afford those costs.
States have grappled with benefit design in their Medicaid and SCHIP programs and also as they have regulated their private insurance markets. States have had to address the question of benefit design in state-based programs that offer subsidies for private or public/private plans offered in the individual and small group markets. There is significant variation on the approach states are taking. Some states are actively pursuing policies that promote a high level of choice between plans while other states have focused on ensuring that their residents are purchasing meaningful coverage. A majority of states have begun to look at ways to ensure that insurance policies promote wellness by removing barriers to preventive care and chronic care management services.

[i] Complete information about Massachusetts affordability standards and benefit design requirements can be found on the Web site for the Connector Board at