Health Care Reform Q&A: Essential Health Benefits (Final Rule)

Essential Health Benefits, Actuarial Value & Accreditation Standards (Final Rule)

Here is an update on one aspect of the Affordable Care Act that you may find helpful as an employer.


Background information


On February 20, 2013, the U.S. Department of Health and Human Services (HHS) released a final rule that details standards for health insurers related to coverage of essential health benefits (EHBs) and actuarial value. In addition, the final rule includes a timeline for qualified health plans to be accredited in the federally-facilitated exchange and provides an application process for the recognition of additional accrediting entities for purposes of certifying qualified health plans.


The final rule closely tracks earlier regulatory guidance related to EHBs, including the proposed rule released on November 20, 2012, and the HHS Essential Health Benefits Bulletin released on December 16, 2011. Under this approach — which was adopted by the final rules — states are provided broad flexibility to choose among alternative EHB packages. The final rule lists the EHB-benchmark plans for the 50 states, the District of Columbia, and the U.S. territories. The vast majority of state EHB benchmark plans (46 states, including DC) are based on one of the largest three small-group plans in the particular state. This regulatory approach and benchmark selection could apply for at least the 2014 and 2015 benefit years.


General questions about Essential Health Benefits


Q. How are “essential health benefits” defined?


A. The Affordable Care Act (ACA) requires health plans offered in the individual and small group markets, both inside and outside of the exchanges, to offer a core package of items and services, known as “essential health benefits.” EHBs must include, at a minimum, items and services within the following 10 categories: ambulatory patient services; emergency services; hospitalization; 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; pediatric services, including oral and vision care.


The ACA sets forth that EHBs be equal in scope to benefits offered by a “typical employer plan.” HHS will meet this requirement in every state by defining EHBs based on a state specific benchmark plan. HHS provided broad flexibility to states in selecting a benchmark plan from among several plan options. The benchmark plan will serve as the reference plan for the state, reflecting both the scope of services and limits offered by the plan in the state.


All plans that cover EHBs must offer benefits that are substantially equal to the benefits offered by the benchmark plan. If allowed by the state, within a given category, an issuer may substitute one benefit for another, as long as the coverage for each category is “actuarially equivalent” to the coverage in the benchmark plan. In the event a state does not make a selection, HHS will select the default benchmark plan, which is the largest small group plan in the state. Further, if a benchmark plan is missing any of the 10 statutory categories of benefits, the final rule requires the state or HHS to supplement the benchmark plan in that category.


The final rule includes a number of standards to protect consumers against discrimination and ensure that benchmark plans offer a full array of essential health benefits and services. For example, the rule prohibits benefit designs that could discriminate against potential or current enrollees. The rule includes special standards and options for health plans for benefits not typically covered by individual and small group policies, such as habilitative services. The rule also establishes standards for prescription drug coverage to ensure that individuals have access to needed prescription medications.




Q. Where can I find further information on benchmark plans?


A. The appendix of the final regulation includes the list of state-selected EHBs benchmark plans, as well as the default benchmark plan for states that did not select a benchmark plan. Additional information on the benchmark plans can be found on the CCIIO website at




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Susan Peters