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Small Business Employee Benefits and HR Blog

Essential Health Benefits - An Overview

The Affordable Care Act defines certain categories of benefits as "Essential Health Benefits." The categories of essential health benefits are:

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

December 16, 2011 Bulletin on Essential Health Benefits

On December 16, 2011, HHS issued a bulletin that proposes granting the states significant flexibility to establish what constitutes essential health benefits in their states. The bulletin addressed covered items and services, but it did not address cost sharing or the calculation of actuarial value, which was addressed in other guidance.essential health benefits overview

November 20, 2012 Proposed Rule on Essential Health Benefits

On November 20, 2012, HHS issued a comprehensive proposed regulation that builds on the proposals in the December 16, 2011 bulletin. The proposed regulations establish a framework for essential health benefits.  Specifically, HHS said that its goal is to pursue an approach that will:

  • Encompass the 10 categories of services identified in the statute;
  • Reflect typical employer health benefit plans;
  • Reflect balance among the categories;
  • Account for diverse health needs across many populations; 
  • Ensure there are no incentives for coverage decisions, cost sharing, or reimbursement rates to discriminate impermissibly against individuals because of their age, disability, or expected length of life; 
  • Ensure compliance with the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA);
  • Provide states a role in defining essential health benefits; and 
  • Balance comprehensiveness and affordability for those purchasing coverage

The proposed regulation permits each state to designate what constitutes essential health benefits from among the following four benchmark plan types:

  1. The largest plan by enrollment in any of the three largest products in the state’s small group market; 
  2. Any of the largest three state employee health benefit plans options by enrollment; 
  3. Any of the largest three national Federal Employees Health Benefits Program (FEHBP) plan options by enrollment; or 
  4. The largest insured commercial HMO in the state.

If a state does not exercise the option to select a benchmark health plan, HHS proposes that the default benchmark plan for that state would be the largest plan by enrollment in the largest product in the state’s small group market.

Additional Resources on Essential Health Benefits