There are two different meanings for the term benchmark plan – and both have to do with the Affordable Care Act:
- The second-lowest-cost Silver plan available in the exchange in a given area. The price of this plan is used to calculate premium subsidies. For an exchange enrollee with income in the subsidy-eligible range, the subsidy amount is based on the cost of the benchmark plan in relation to the allowable percentage of the enrollee’s income. The benchmark plan will vary from one part of a state to another, depending on the rating area and plan availability.
- The plan that each state designates as the standard for essential health benefits (EHBs). The ACA created a broad framework for EHBs, but left the details up to each state. States were responsible for picking their own benchmark plan from a list of acceptable options. Health insurance carriers in the individual and small group markets in each state use the benchmark plan as a guide for creating their own EHB coverage.
For 2014 to 2016, the benchmark plan is a plan that was sold in the state in 2012 (plus supplementation if there were any EHBs that weren’t covered by the plan that was chosen as the benchmark). For 2017 through 2019, the benchmark plan is a plan that was sold in the state in 2014. Starting with the 2020 plan year, states could continue to use their existing benchmark plans or make modifications under new guidelines that were designed to give states more flexibility in setting their benchmark plans. For the 2020 plan year, Illinois made modifications to its benchmark plan, and for the 2021 plan year, South Dakota has made modifications to its benchmark plan. For 2022, Michigan, New Mexico, and Oregon have made changes to their benchmark plans. You can see each state’s benchmark plan details here.