Benefits & Compensation News

Feds issue long-awaited ‘essential health benefits’ rule

The Department of Health and Human Services (HHS) just issued a proposed rule governing the “essential health benefits” mandate under the healthcare reform law. Did it help paint a clearer picture of what those benefits must be?

Not really.

The proposed rule essentially repeats what earlier HHS bulletins said — that the “essential benefits” requirements will be determined by the most popular employer health insurance plans offered within each state.

The HHS said that to prepare the proposed rule it took into consideration more than 11,000 comments it received on its earlier bulletins.

It’ll also accept comments on this proposed rule until Dec. 26.

What you need to know

The proposed rule says beginning Jan. 1, 2014 all non-grandfathered health insurance plans in the individual and small group markets — whether they’re offered through a state exchange or not — will be required to cover services in at least 10 categories, which are:

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services
  • Prescription medications
  • Rehabilitative and habilitative services and devices
  • Lab services
  • Preventive and wellness services and chronic disease management, and
  • Pediatric services, including oral and vision care.

The rule proposes states select a benchmark plan from among these four options:

  1. The largest plan by enrollment in any of the three largest small group insurance products offered in the state
  2. Any of the three largest state employee health benefit plans by enrollment
  3. Any of the largest three national Federal Employee Health Benefits Program plan options by enrollment, or
  4. The largest insured commercial HMO in the state.

All plans offered in any given state must offer benefits substantially equal to the benefits offered by the state’s benchmark plan. If a state does not select a benchmark plan, HHS will select the largest small group product in the state as the benchmark plan for that state.

If a benchmark plan does not cover services in one of the 10 required categories above, the state or HHS will create supplementary benchmarks for that category.

The idea behind each state establishing its own benchmark plan is that they’ll be able to tailor coverage limits based on what local residents have come to need or expect.

Actuarial value

The rule also laid out the requirement that health insurance plans meet one of four “metal” levels of coverage based on actuarial value: bronze, silver, gold and platinum.

The actuarial value is the percentage (on average) of the total cost of care a plan will cover. For example: If a plan has an actuarial value of 80%, an individual under that plan would be responsible for 20% of the cost of his or her care.

The actuarial values are as follows:

  • A bronze plan will cover 60% of care costs
  • A silver plan will cover 70%
  • A gold plan will cover 80%, and
  • A platinum plan will cover 90%.

To meet a particular metal level, a plan’s actuarial value must fall within 2% of the standard. So to be considered in the silver level, a plan’s actuarial value can fall as low as 68%.

The idea behind the metal levels is that they’ll help consumers comparison shop.

The HHS has created an actuarial value calculator (Microsoft Excel spreadsheet) to help insurers determine where their coverages will fall.

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