Essential Health Benefits: New FAQs Disclose Direction of Future Guidance

• Single Benchmark — A state will select only one EHB benchmark plan which will apply to the small group and individual market both inside and outside of the Exchange in that state.
• Frozen in Time — At least initially the EHB benchmark plan will be "frozen in time." The benefits selected in 2012 will apply for the 2014 and 2015 years, without change. DHHS intends to revisit this approach for 2016.
• State Mandated Benefits — If a state chooses a benchmark plan that does not include all of the state-mandated benefits, it will be required to defray the cost of the state-mandated benefits that need to be added to the selected benchmark. Further, under a proposal being formulated, any state-mandated benefits enacted after 2011 cannot be part of the EHB for 2014 or 2015 (unless they are already included within the benchmark plan irrespective of the mandate).
• Missing Coverage in a Required Category — If the state benchmark is missing coverage in one or more of the ten required categories, the coverage must be supplemented by reference to another benchmark plan that includes the missing category of coverage. A proposal is being formulated to prescribe the process for "filling in" the missing coverage categories.
• Multi-State Employers — As the FAQs explain, an insured group health plan that covers employees in more than one state would typically be issued where the employer's primary place of business is located and, as such, the policy would conform to the requirements in that state. Therefore, the applicable EHB benchmark for multi-state employers would be the benchmark for the state in which the insurance policy is issued (and would apply to all the plan participants regardless of their state of residence).
• Selection of the Benchmark — The DHHS rules will propose that the states select an EHB benchmark plan in the 3rd quarter two years prior to the coverage year, based on enrollment from the 1st quarter of that year. Under this approach, the selection of the benchmark plan for 2014 and 2015 will take place in the 3rd quarter of 2012. DHHS will report the top 3 federal employee health benefit plan benchmark plans to the states based on enrollment information it obtains from the Office of Personnel Management, and will report the top three small group market products in each state based on data from Healthcare.gov for the 1st quarter of 2012. States that want to consider state employee plans or the largest HMO will have to identify the benchmark options for those plans (as they currently do for Medicaid and CHIP). Precisely how a state will communicate its election of the EHB benchmark plan to DHHS is yet to be determined.
• Minimum Benefits within a Category — A plan will be permitted to substitute coverage of services within a category as long as the substitutions are actuarially equivalent to the selected EHB benchmark based on the CHIP standards. The FAQs give an example of providing coverage for up to 10 covered physical therapy visits and up to 20 covered occupational therapy visits in substitution for a benchmark that provides up to 20 covered physical therapy visits and up to 10 covered occupational therapy visits. The substitution would satisfy the benchmark as long as it was actuarially equivalent and met any other applicable criteria (e.g., statutory requirements).
• Scope, Duration and Dollar Limits — A plan in the small group and individual market will be required to be substantially equal to the benchmark plan in scope of benefits and any limitations on those benefits, the FAQs explain. As a result, scope and duration limits can apply to EHBs as long as other statutory prohibitions are satisfied (e.g., nondiscrimination requirements, prohibitions on annual and lifetime dollar limits, etc.). A state-selected benchmark plan that applies a dollar limit on EHBs will be treated as not imposing a dollar limit. Plans would, however, be permitted to impose non-dollar limits that are actuarially equivalent to the annual dollar limits, the FAQs explain.
• Medicaid Benchmark — A state is not required to select the same EHB benchmark plan for its Medicaid section 1937 plans that it selects for the individual and small group markets. Further, it could have more than one EHB benchmark plan for Medicaid if it develops more than one benefit plan under section 1937.

These plans are permitted to impose non-dollar limits, consistent with other guidance, on EHB as long as they comply with other applicable statutory provisions. In addition, these plans can continue to impose annual and lifetime dollar limits on benefits that do not fall within the definition of EHB.

[T]he Departments of Labor, Treasury, and HHS will consider a self-insured group health plan, a large group market health plan, or a grandfathered group health plan to have used a permissible definition of EHB under section 1302(b) of the Affordable Care Act if the definition is one that is authorized by the Secretary of HHS (including any available benchmark option, supplemented as needed to ensure coverage of all ten statutory categories). Furthermore, the Departments intend to use their enforcement discretion and work with those plans that make a good faith effort to apply an authorized definition of EHB to ensure there are no annual or lifetime dollar limits on EHB.

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Copyright 2012, Deloitte.

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