One of the least-publicized aspects of the Affordable Care Act is the package of "essential health benefits" that must be included in any health insurance plan that is sold to individuals or businesses. These include such services as maternity and newborn care, hospitalization, ambulatory care and prescription drugs.Rather than establishing a national standard for the essential health benefits each insurance company provides, the Department of Health and Human Services has decided to let each state choose from a set of pre-established plans. A minimum package consisting of ten categories must be offered, but each state will choose its own plan to serve as a benchmark. Whatever that plan includes will be considered the "essential benefits" for that particular state.
Historically, there hasn't been a predetermined standard for what must be included in a healthcare plan, at least not on a national level. With the exception of self-insured plans, health insurance is regulated by the states. While they were subject to certain federal minimum standards, the plans were not required to offer a minimum package of benefits. That said, almost all plans cover inpatient hospital care, primary care visits and outpatient procedures.
How will the "essential benefits package" help consumers?
While most individual health plans offer coverage for inpatient hospitalization, the Department of Health and Human Services estimates that 62% of them do not provide maternity coverage. Fortunately, maternity benefits will be included in the essential package of services. Since the goal of Obamacare is to reduce the number of Americans who are uninsured or underinsured, it is important to include more "meaningful" coverage that is also affordable. This may mean including coverage for mental health services, home health care and prescription drugs.
How will the essential benefits package impact people who are already insured?
The package of required benefits will only apply to people who are newly eligible for Medicaid and Medicare coverage, and would only apply to the subsidized portion of the plan. For those who are self-insured, part of a group market or covered by a grandfathered plan, essential benefits would not apply.
When will these benefit benchmarks go into effect?
This phase of the Affordable Care and Patient Protection Act is set to begin in 2014 within the individual and small group markets as well as state-based healthcare exchanges. Health and Human Services (HHS) announced that each state must define its own essential benefits by choosing a benchmark plan for 2014 and 2015.
How will states select a benchmark plan?
One of the more flexible requirements of Obamacare, the essential benefits package can be customized for the needs of each state. Rather than adopting a one-size-fits-all healthcare plan to serve as the benchmark, states may choose from among the following plans:
- One of the 3 largest small group plans, based on enrollment
- One of the 3 largest health plans for state employees, by enrollment
- One of the 3 largest health plan options for federal employees, by enrollment, or
- The largest HMO plan offered by the state's consumer/professional insurance providers
Will a state's benchmark plan be different for group health plan members than it is for self-insured individuals?
Self-insured individuals will be happy to know that the same benchmarks will apply to their plans as what would apply to a small group health plan. In every state, the chosen benchmark will be used for both individual and small group markets. However, states will be allowed to choose the same or a different plan for Medicaid recipients. In other words, states are not required to provide the same benefits for Medicaid as they would in the benchmark plan.
What happens if a state does not select a benchmark plan to define its "essential health benefits?"
If a state doesn't select a plan in time, the default benchmark plan will automatically be the one with the largest enrollment in the state's small group market. However, based on evaluation and feedback this approach could be changed in 2016 and beyond.
Do the essential benefits apply to group plans only?
No. The benchmark plan applies to both individual and small group health plans. The only plans exempted from this guideline are Medicaid and grandfathered plans. Keep in mind that a benchmark is just a guideline for insurers so they can make their benefits "actuarially equivalent," or approximately the same for each of the required ten categories.