Essential Health Benefits
For plan years beginning on or after January 1, 2014, non-grandfathered insured, small group plans must provide coverage for all essential health benefits, to be defined by state regulations. All Exchange plans must also cover essential health benefits. Essential health benefits are intended to be similar to what a “typical” employer plan cover 10 general categories of items and services. On December 16, 2011, the Department of Health and Human Services (HHS) issued a bulletin outlining a proposal to give states flexibility to define the required essential health benefits. Under the HHS proposal, states would be able to define essential health benefits in their states for the years 2014 and 2015 by reference to a “benchmark” plan reflecting the scope of services offered by a “typical employer plan.” On July 16, 2012, HHS approved the final rule which includes data reporting standards for health plans that represent potential State-specified benchmark plans. Specifically, the final rule establishes that issuers of the largest three small group market products in each state report information on covered benefits. The final rule requires that the three largest insurers (determined by enrollment as of March 31, 2012) in each state provide the HHS with a report by Sept. 14, 2012, with the following information:
- Administrative data necessary to identify the health plan;
- Data and descriptive information for each plan on the following items:
a. All health benefits in the plan;
b. Treatment limitations;
c. Drug coverage; and
In addition, included in the final rule, HHS approved the list of essential health benefits and issued the final rules.The scope of benefits must cover at least the following 10 general categories of items and services:
- Ambulatory patient services;
- Emergency services;
- maternity and newborn care;
- mental health and substance use disorder services, including behavioral health treatment;
- prescription drugs;
- rehabilitative and habilitative services and devices;
- laboratory services;
- preventive and wellness services and chronic disease management; and,
- pediatric services, including oral and vision care.
Although self-funded health plans are not required to cover essential health benefits, the Health Care Reform law says that self-funded plans can’t impose lifetime or annual dollar limits on essential health benefits (for plan years beginning in 2011 and 2014, respectively). The HHS final rule does not address how self-funded plans will be affected by the state definitions of essential health benefits.
Note: The limit on essential health benefits only applies to certain types of health plans, such as major medical insurance. It does not apply to HIPAA excepted benefits, such as disability, cancer, hospital indemnity, or accident insurance. Click here for more information about the types of benefits that are exempt from the Health Care Reform plan design mandates.
Essential Health Benefits Hot Topics & FAQs
- Will plans offered through state Health Insurance Exchanges have to cover all essential health benefits?
Answer: Yes, all plans offered through the Exchanges will be required to cover essential health benefits.
- Do self-funded employer plans have to cover essential health benefits?
Answer: No, this rule only applies to certain insured plans. Employers that have self-funded health plans will have more choices with respect to the health plan benefits they cover than insured plans beginning in 2014.
American Fidelity Assurance Company does not provide tax or legal advice.