Snapshot
PPACA requires that health insurers offering coverage in the individual or small group health insurance markets include essential health benefits beginning January 1, 2014. There are 10 required categories of services in the essential health benefits package.
On December 16, 2011 HHS issued an Informational Bulletin announcing that it intends to propose that essential health benefits be defined using a benchmark approach. The benchmark could vary by State providing flexibility to meet the needs of their citizens.
Self-insured health plans, large plans (greater than 100 participants in the previous year) as well as grandfathered small plans are not subject to the essential benefit requirement.
However, large employers are affected because health care reform prevents plans from applying limits on essential health benefits.
The Informational Bulletin represents the intended regulatory approach and HHS encourages public input. Comments are due by January 31, 2012.
The Benchmarks
States would be able to choose from the following proposed benchmarks:
- One of the three largest small group plans in the state by enrollment
- One of the three largest state employee health plans by enrollment
- One of the three largest federal employee health plan options by enrollment
- The largest HMO plan offered in the State’s commercial market by enrollment
If a State doesn’t choose a benchmark, the default benchmark will be the small group plan with the largest enrollment in the State.
A State could modify coverage within a benefits category as long as it doesn’t reduce the value of the coverage.
States must defray the cost of any state mandated benefits in excess of essential health benefits.
Comment: To quote an oft used phrase “the devil is in the details”; the impact of “flexibility” on plan administration and communication processes for employers with employees in multiple states remains to be seen.
The Process for getting to this approach
PPACA required the DOL to survey employers to determine typical benefit offerings. This report was provided to HHS in April 2011. In addition, HHS requested the Institute of Medicine to provide recommendations regarding a process for updating the benefits included in the essential health benefits package.
What is not covered in the Informational Bulletin
The Informational Bulletin does not address the cost sharing requirements of PPACA (deductibles, copayments or coinsurance) or various coverage levels (bronze, silver, gold, platinum). These issues will be addressed in separate guidance.
What should plan sponsors do?
- Consider commenting or submit your comments to your consultant to include in their comment letter.
- Stay tuned for further developments
You may want to check our new blog periodically for quick updates on compliance issues.
Note: all links are active as of the date of issuance of this ErisaALERT.
Disclaimer: This material is for the sole purpose of providing general information and does not under any circumstances constitute legal advice and should not be used as a substitute for legal advice. You should seek the advice of counsel when applying the requirements to your plan. For more information on this ErisaALERT contact us by phone at 610-524-5351 and ask for Mary Andersen or 973-994-7539 and ask for Theresa Borzelli.
