Essential Health Benefit Package Requirements Q&A

Overview

As of 2014, the ACA requires that non-grandfathered health insurance coverage offered in the individual and small group markets, both on and off of the health insurance exchanges, offer a standard package of coverage known as “essential health benefits.” ACA requires the following categories of essential health benefits to be included: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance abuse services; 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). In addition, the benefit plan for non-grandfathered individual and small group health insurance policies must adhere to other benefit requirements, including cost-sharing requirements and actuarial value requirements, as discussed below.

Do plans have to include the essential health benefit package?

Yes, non-grandfathered individual and small group insured plans will be required to include the essential health benefit package as part of the mandate to provide comprehensive coverage. This requirement applies to plans offered on or off of the exchange.

What is the essential health benefit package?

Coverage that 1) provides for the essential health benefits; 2) limits cost-sharing; and 3) provides either the bronze, silver, gold, or platinum levels of coverage (also known as the metal levels of coverage). More information on each of these requirements can be found below.

How is “essential health benefits” defined?

For the first two years, the Department of Health and Human Services (HHS) announced the approach for essential health benefits as defined by a state benchmark plan (either selected by state based on options, or defaulted under the federal rules).

More detail on the state benchmark plans can be found on the HHS website at: http://www.cms.gov/CCIIO/Resources/Data-Resources/ehb.html

What happens if the state benchmark plan does not include all 10 essential health benefit categories, as required under the ACA?

The final regulation on essential health benefits specifies special rules for certain benefits that may not be included in a benchmark plan. In these cases, the benchmark plan will be supplemented to ensure coverage for the essential health benefit category. Special rules are included for habilitative benefits as well as pediatric vision and pediatric dental benefits.

What are the cost sharing requirements under the essential health benefit package requirements? There are two requirements:

1. Out-of-pocket maximum: The cost sharing for plan and policy years beginning in 2014 cannot exceed the annual dollar limit that is in effect for high deductible health plans (HDHPs) under the Internal Revenue Code and in place for 2014. For 2014, the limit is $6,350 (self only coverage)/$12,700 (non-self only coverage). This amount may change annually based on a premium adjustment percentage. (Note: this requirement also applies to non-grandfathered large group policies and self-funded plans, as well)
2. Deductible limitation on small group policies: The annual deductible for small group policies cannot generally exceed $2,000 (self-only coverage)/$4,000 (non-self only coverage).

What are the actuarial value requirements?

Actuarial value is the percentage of cost of benefits that a plan is expected to cover. Non-grandfathered individual and small group policies are required to offer coverage that meets an actuarial value of 60 percent (bronze), 70 percent (silver), 80 percent (gold), 90 percent (platinum). These levels are referred to as metallic levels of coverage.

When does the mandate to include the essential health benefit package take effect?

These requirements are effective for non-grandfathered policies beginning or renewing on or after January 1, 2014.