H&W: Essential Health Benefits

Essential Health Benefits: On December 16, 2011, the Department of Health and Human Services (HHS) released a Bulletin describing its approach in defining the essential health benefits (EHB) under the Affordable Care Act. Recently, it provided additional guidance in the form of 22 questions and answers.

Non-grandfathered plans in the individual and small group markets must cover the EHB beginning in 2014. Self-insured group health plans, health insurance coverage offered in the large group market, and grandfathered health plans are exempt from this requirement.

In its earlier Bulletin, the HHS stated it intended to define the EHB through a benchmark plan selected by each State. The selected benchmark plan would serve as a reference plan, reflecting both the scope of services and any limits offered by a “typical employer plan” in that State.

It proposed that the following four benchmark plan types for 2014 and 2015 best reflect the statutory standards for EHB in the Affordable Care Act:

1. the largest plan by enrollment in any of the three largest small group insurance products in the State’s small group market;

2. any of the largest three State employee health benefit plans by enrollment;

3. any of the largest three national FEHBP plan options by enrollment; or

4. (the largest insured commercial non-Medicaid Health Maintenance Organization (HMO) operating in the State.

States would be permitted to select a single benchmark to serve as the standard for qualified health plans inside the Exchange operating in their State and plans offered in the individual and small group markets in their State.

The statute distinguishes between a plan’s covered services and the plan’s cost-sharing features, such as deductibles, copayments, and coinsurance. The cost-sharing features will determine the level of actuarial value of the plan, expressed as a “metal level” as specified in statute: bronze at 60 percent actuarial value, silver at 70 percent actuarial value, gold at 80 percent actuarial value, and platinum at 90 percent actuarial value.

HHS intends to assess the benchmark process for the year 2016 and beyond based on evaluation and feedback.