The Essential Health Benefits Package

Significant changes can be expected for many Americans in terms of the “Essential Health Benefits” plans that will be offered when states begin implementing the public health care exchanges mandated by the Patient Protection and Affordable Care Act (PPACA) in less than two years.

These changes are in addition to the benefit plan adjustments that already went into effect for new and existing insurance coverages over the past year. Changes that already have been made include limits on pre-existing conditions, raising the cap on lifetime limits for essential benefits, limitations on when coverage can be rescinded, the age extension on coverage eligibility for children up to age 26 and coverage for preventive care – among other reforms.

Unless PPACA is over-turned or modified, brokers and agents need to be vigilant and track the impending mandates that will take effect. The good news is that there will be opportunities to standardize health care benefit offerings, but the potentially bad news is that the PPACA-mandated changes may increase premium costs for many and may disrupt some existing insurance markets.

This Legislative Alert highlights some current activities as the U.S. Department of Health and Human Services (HHS) takes the lead in defining what the new benefit offerings will be.

Essential Health Benefits Defined

Effective January 1, 2014, a health benefit plan offered through a state exchange will have to provide an Essential Health Benefits Package. PPACA defines Essential Health Benefits in Section 1302 of PPACA:

SEC. 1302. ESSENTIAL HEALTH BENEFITS REQUIREMENTS.

(a) ESSENTIAL HEALTH BENEFITS PACKAGE.--In this title, the term "essential

health benefits package" means, with respect to any health plan, coverage that--

(1) provides for the essential health benefits defined by the Secretary under subsection (b);

(2) limits cost-sharing for such coverage in accordance with subsection (c); and

(3) subject to subsection (e), provides either the bronze, silver, gold, or platinum level of coverage described in subsection (d).

Under Section 1302 subsection (b), PPACA then further defines “Essential Health Benefits” as

(1) IN GENERAL.--Subject to paragraph (2), the Secretary shall define the essential health benefits, except that such benefits shall include at least the following general categories and the items and services covered within the categories:

(A) Ambulatory patient services.

(B) Emergency services.

(C) Hospitalization.

(D) Maternity and newborn care.

(E) Mental health and substance use disorder services, including behavioral health treatment.

(F) Prescription drugs.

(G) Rehabilitative and habilitative services and devices.

(H) Laboratory services.

(I) Preventive and Wellness services and Chronic Disease Management.

(J) Pediatric services, including oral and vision care.

Regulatory Details

After the initial adoption of PPACA, the real work often emerges through the regulatory process. The shaping and fine-tuning of the specifics behind the Essential Health Benefits concept is no exception. As part of the regulatory process, the Secretary of HHS has asked a number of different agencies and groups of experts to help with this assignment.

For example, HHS has requested the National Association of Insurance Commissioners (NAIC) to develop standards for a summary of benefits, coverage explanations and enrollment forms for Essential Health Benefit plans for individuals and groups.¹ These documents are in the final stages and will be submitted to the Secretary this spring.

In addition, the Institute of Medicine (IOM), a non-profit group which was charted by Congress in 1970 through the U.S. National Academy of Sciences, has been asked by HHS to provide guidance on this issue. The IOM has been meeting on this topic since last November. Rather than suggesting specific benefits or services, IOM researchers have been asked to consider how insurers determine coverages and medical necessity criteria, then make recommendations to the HHS Secretary.²

PPACA further instructs the Secretary of HHS to ensure that the scope of the Essential Health Benefits Package is greater than or equal to the scope of benefits provided under a typical employer plan. In order to make this determination, Section 1032 of PPACA instructs the Secretary of HHS to “conduct a survey of employer-sponsored coverages to determine the benefits typically covered by employers, including multiemployer plans…” The HHS Secretary also has asked the U.S. Department of Labor (DOL) to conduct this survey, which is underway. DOL expects to issue a report to the Secretary in late spring.

A NAIC analysis of PPACA offers the following as well:

The scope of benefits is to be determined by the Secretary of HHS and equal to the scope of benefits under a typical employer-based plan. Nothing shall prevent a qualified health plan from providing benefits in excess of the essential benefits package.

The cost-sharing under a health plan may not exceed the cost-sharing for highdeductible health plans in 2014 (currently $5,950 individual/$11,900 family). In following years, the limitation on cost-sharing is indexed to the rate or average premium growth.

Deductibles for plans in the small group market are limited to $2,000 individual/$4,000 family, indexed to average premium growth. This amount may be increased by the maximum amount of reimbursement available to an employee under a flexible spending arrangement.³

Levels of Coverage

PPACA defines specific levels of coverage to be offered by the state exchanges. They are:

• BRONZE LEVEL- A plan at the bronze level shall provide a level of coverage that is designed to provide benefits that are actuarially equivalent to 60 percent of the full actuarial value of the benefits provided under the benefit plan.
• SILVER LEVEL- A plan at the silver level shall provide a level of coverage that is designed to provide benefits that are actuarially equivalent to 70 percent of the full actuarial value of the benefits provided under the benefit plan.
• GOLD LEVEL- A plan at the gold level shall provide a level of coverage that is designed to provide benefits actuarially equivalent to 80 percent of the full actuarial value of the benefits provided under the benefit plan.
• PLATINUM LEVEL- A plan at the platinum level shall provide a level of coverage that is designed to provide benefits that are actuarially equivalent to 90 percent of the full actuarial value of the benefits provided under the benefit plan.⁴

Any reference to a bronze, silver, gold or platinum plan shall be treated as a reference to a qualified health plan providing a bronze, silver, gold or platinum level of coverage. PPACA authorizes the Secretary of HHS to develop guidelines that provide minimal variation in the actuarial valuations used in determining the level of coverage of a plan to account for differences in actuarial estimates.

To date, no proposed or interim final rules on this issue have been released for public comment.

Any reference to a bronze, silver, gold or platinum plan shall be treated as a reference to a qualified health plan providing a bronze, silver, gold or platinum level of coverage. PPACA authorizes the Secretary of HHS to develop guidelines that provide minimal variation in the actuarial valuations used in determining the level of coverage of a plan to account for differences in actuarial estimates. To date, no proposed or interim final rules on this issue have been released for public comment.

While January 1, 2014 appears to be relatively distant, the time that your clients will be considering their coverage for that date will be here in a little more than a year. It is not too soon to become conversant in the major changes that will be happening then. As more information becomes available, BenefitMall is committed to keeping you up-todate in a timely manner. Visit www.BenefitMall.com to view past Legislative Alerts in the “Newsroom” section. Or, you may visit www.HealthcareExchange.com for blog posts, polls, surveys and numerous resources. If you have any questions, please contact your local BenefitMall Sales Team and they will be happy to assist you. Thank you for taking the time to read through this important notification.

1. NAIC.org

2. AMA-ASSN.org

3. NAIC.org

4. ibid