The Department of Health and Human Services (HHS) has posted a series of answers to frequently asked questions on essential health benefits (EHB). On December 16, 2011, HHS released a Bulletin describing the approach it intends to take in future rulemaking to define EHB under the Affordable Care Act. The answers to these questions are intended to provide additional guidance on HHS’s intended approach to defining EHB. The answers clarify a number of issues, including:
- A State would select only one of the benchmark options as the applicable EHB benchmark plan across its individual and small group markets both inside and outside of the Exchange.
- Under the intended approach, the specific set of benchmark benefits selected in 2012 would apply for plan years 2014 and 2015. For 2014 and 2015, the EHB benchmark plan selection would take place in the third quarter of 2012. HHS intends to revisit this approach for plan years starting in 2016.
- HHS intends to propose that if a benchmark plan is missing coverage in one or more of the ten statutory categories, the State must supplement the benchmark by reference to another benchmark plan that includes coverage of services in the missing category.
- HHS said that its research found that three categories of benefits – pediatric oral services, pediatric vision services, and habilitative services – are not included in many health insurance plans. The FAQs describes special rules to ensure meaningful benefits in those categories.
- A plan could substitute coverage of services within each of the ten statutory categories, so long as substitutions were actuarially equivalent and provided that substitutions would not violate other statutory provisions.
- Under the intended approach, a plan must be substantially equal to the benchmark plan, in both the scope of benefits offered and any limitations on those benefits such as visit limits. However, any scope and duration limitations in a plan would be subject to review pursuant to statutory prohibitions on discrimination in benefit design.
- If a benefit included within a State-selected EHB benchmark plan was to have a dollar limit, that benefit would be incorporated into the EHB definition without the dollar limit. However, plans would be permitted to make actuarially equivalent substitutions within statutory categories. Therefore, plans would be permitted to impose non-dollar limits, consistent with other guidance, that are at least actuarially equivalent to the annual dollar limits.
- Under the Affordable Care Act, self-funded group health plans, large group market health plans, and grandfathered health plans are not required to offer EHB. However, the prohibition on imposing annual and lifetime dollar limits on EHB does apply to self-funded group health plans, large group market health plans, and grandfathered group market health plans. These plans are permitted to impose non-dollar limits, consistent with other guidance, on EHB as long as they comply with other applicable statutory provisions. In addition, these plans can continue to impose annual and lifetime dollar limits on benefits that do not fall within the definition of EHB. The Departments of Labor, Treasury, and HHS intend to use their enforcement discretion and work with those plans that make a good faith effort to apply an authorized definition of EHB to ensure there are no annual or lifetime dollar limits on EHB.
- Generally, the current practice in the group health insurance market is for the health insurance policy to be issued where the employer’s primary place of business is located. As such, the employer’s health insurance policy must conform to the benefits required in the employer’s State, given that the employer is the policyholder. Nothing in the proposed approach seeks to change this practice. Therefore, the applicable EHB benchmark for the State in which the insurance policy is issued would determine the EHB for all participants, regardless of the employee’s State of residence.
- Preventive services will be a part of EHB.
- HHS intends to propose that the mental health parity requirements apply in the context of EHB.
- HHS plans to report the top three Federal Employees Health Benefit Plan benchmark plans to States based on information from the Office of Personal Management. HHS also plans to provide States with a list of the top three small group market products in each State based on data from HealthCare.gov from the first quarter of the 2012 calendar year. If a State chooses to consider State employee plans and/or the largest commercial HMO benchmark plans, the State would be required to identify benchmark options for those benchmark plans.
- HHS intends to propose that States must select an EHB benchmark plan in the third quarter two years prior to the coverage year, based on enrollment from the first quarter of that year.
- HHS anticipates that it will identify and provide benefit information with respect to State-specific default benchmark plans in the Fall of 2012.
- Each State would be permitted to select a benchmark plan from the options provided by HHS by whatever process and through whatever State entity is appropriate under State law.
