Blue Cross and Blue Shield of Illinois

 

November 15, 2013

Legislative Update
Affordable Care Act Question of the Week: Essential Health Benefits

The “Question of the Week” answers frequently asked questions regarding the Affordable Care Act. This week, we feature a question about the Essential Health Benefits

The Affordable Care Act (ACA) set 10 categories of items and services that are referred to as “essential health benefits” (EHBs). Generally, ACA prohibits group health plans and insurers that offer health insurance coverage from placing annual limits on the dollar value of EHBs. Beginning with the first plan year on or after Jan. 1, 2014, more changes will go into effect. Non-grandfathered individual and non-grandfathered insured small group plans will be required to cover EHBs beginning on the first plan year on or after Jan. 1, 2014. The minimum package of items and services that must be covered in each of the 10 categories will be generally defined by each state's EHB benchmark plan.

Although grandfathered plans and large group plans (both fully insured and ASO) will not have to cover EHBs, there are underlying rules they must follow. 

Q: Why do the EHB benchmark plans matter to large group health plans?

A: Previously, insurers and self-funded plan sponsors used a “good faith” definition to determine which benefits are considered EHBs for the purpose of addressing dollar limits. Beginning with the 2014 plan year, insurers and self-funded plan sponsors must use an “authorized” definition (authorized by the U.S. Secretary of Health and Human Services [HHS]) of EHBs for large group plans to address dollar limits and to meet new out-of-pocket maximum (OOPM) requirements. This means that even though large groups do not have to cover EHBs, they still must use some type of EHB definition authorized by HHS to know which services cannot have an annual or lifetime dollar maximum and will also apply towards the OOPM.

This communication is intended for informational purposes only. It is not intended to provide, does not constitute, and cannot be relied upon as legal, tax or compliance advice. The information contained in this communication is subject to change based on future regulation and guidance.

 


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