The Department of Health and Human Services (HHS) has issued a set of proposed regulations outlining the essential health benefits that must be included in all insurance plans in accordance with the Patient Protection and Affordable Care Act (PPACA). The PPACA defines 10 categories of benefits that all health insurance plans offered through an exchange are required to offer, beginning January 1, 2014. This new rule applies to all non-grandfathered plans in the individual and small group markets (100 or fewer employees), whether the plans are offered inside or outside state insurance exchanges.

Self-insured group health plans, health insurance coverage in the large group market, and grandfathered plans are not required to offer the essential health benefits.

The 10 categories of essential health benefits are:

  • Ambulatory Patient Services
  • Emergency Services
  • Hospitalization
  • Mental Health and Substance Abuse/Behavior Health Treatment
  • Maternity and Newborn Care
  • Prescription Drugs
  • Rehabilitative and Habilitative Services/Devices
  • Lab Services
  • Preventative and Wellness Services & Chronic Disease Control
  • Pediatric Services, including Oral and Vision Care

The PPACA directs the Department of Health and Human Services (HHS) to more specifically define the items and services that compromise essential health benefits. In an informational bulletin issued December 16, 2011, rather than detailing the items and services, the HHS has deferred to individual states by offering them flexibility in selecting their own benchmarks for defining essential health benefits.

Under the benchmark approach outlined the HHS informational bulletin, each state would select a benchmark insurance plan that reflects the scope of services offered by a typical employer plan in that state. States would select a benchmark plan from one of the following:

  • One of the three largest small group plans in the state, according to enrollment
  • One of the three largest state employee health plans, according to enrollment
  • The largest HMO plan offered in the state’s commercial market, according to enrollment

If a state fails to select a benchmark plan, the small group plan with the largest enrollment in the state will be the default benchmark.

Once a state has selected a benchmark plan – whether by choice or default – the items and services included in the benchmark plan will be the essential health benefits package for plans within that state exchange.

If the 10 categories of care specified by the PPACA (listed above) are not covered in the benchmark plan, the state has the option to examine other benchmark insurance plans, including the Federal Employee Health Benefits Plan to create a list of items and services that meet the PPACA requirement.

According to HHS, health plans will have the flexibility to adjust benefits, including specific services covered and quantitative limits, as long as coverage is offered for all 10 categories defined by the essential health benefits and the coverage has the same value.

VISICOR is a full-service employee benefits brokerage and consulting firm located in Houston, Texas, serving mid-size to large public and private organizations. VISICOR can be reached by phone at (281) 824-3124 or at www.visicor.net