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 covers and, at a minimum, must include ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness, disease management, and pediatric 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.” HHS proposes that states select one benchmark plan from among ten different plans with the largest enrollment – three are small group plans, six are large group plans, and one is the largest commercial HMO operating in the state. States would be required to choose their benchmark plan for 2014 by the 3rd quarter of 2012. If a state fails to select a benchmark plan, HHS proposes that the default benchmark plan for that state would be the largest plan by enrollment in the largest product in the state's small group market.
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 proposal does not address how self-funded plans will be affected by the state definitions of essential health benefits.
Note: The requirement to cover essential 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.