Policy Would Define "Essential Health Benefits" by Existing Benchmark Health Plans Selected by States
Posted on Wed, Dec 21, 2011
The U.S. Department of Health and Human Services (HHS) has announced that it intends to propose that items and services required to be covered as "essential health benefits" under the Affordable Care Act, be defined by an existing benchmark health insurance plan to be selected by each state.
Required Coverage of "Essential Health Benefits"
Under the Affordable Care Act, nongrandfathered plans in the individual and small group markets both inside and outside of the Affordable Insurance Exchanges must cover "essential health benefits" beginning in 2014, including items and services within ten categories of benefits such as preventive care, emergency services, maternity care, hospital and physician services, and prescription drugs.
The Affordable Care Act requires HHS to define "essential health benefits" and requires that the scope of such benefits be equal to the scope of benefits provided under a typical employer plan.
Defining "Essential Health Benefits"
The intended approach announced by HHS would offer states the flexibility to select an existing health plan to set the "benchmark" for the items and services included in the essential health benefits package, which reflects the scope of services offered by a "typical employer plan." States would choose one of the following health insurance plans as a benchmark:
- One of the three largest small group plans in the state;
- One of the three largest state employee health plans;
- One of the three largest federal employee health plan options;
- The largest HMO plan offered in the state’s commercial market.
The benefits and services included in the health insurance plan selected by the state would be the essential health benefits package. Plans could modify coverage within a benefit category so long as they do not reduce the value of coverage.
Consistent with the law, states must ensure the essential health benefits package covers items and services in at least ten categories of care. If a state selects a plan that does not cover all ten categories of care, the state will have the option to examine other benchmark insurance plans, including the Federal Employee Health Benefits Plan, to determine the type of benefits that will be included in the essential health benefits package.
Note that the bulletin issued by HHS addresses only the services and items covered by a health plan, not the cost sharing, such as deductibles, copayments, and coinsurance. The cost-sharing features will be addressed in future bulletins and cost-sharing rules will determine the actuarial value of the plan.
Additional Information
For more on the Affordable Care Act, log-on to the Client Resource Center and search for "Health Care Reform" in the HR and Benefits Library. The links below contain additional information on the intended rulemaking by HHS relating to defining essential health benefits.
