On February 17, 2012, the U.S. Department of Health and Human Services (HHS) released a set of FAQs concerning the Essential Health Benefits Bulletin it issued on December 16, 2011. The FAQs offer new guidance and raise new questions about the scope of what is considered an essential health benefit (EHB) for purposes of applying the prohibitions against annual and lifetime limits.
Under the Affordable Care Act (ACA), the coverage offered by state health insurance exchanges and health insurance issuers in the individual and small group markets must include EHBs, except where grandfathered. The ACA also prohibits insurers and plans (even large, self-funded plans) from imposing annual and lifetime dollar limits on EHBs. The Bulletin established an approach for defining EHBs by reference to certain “benchmark” plans, which could vary from state to state. The Bulletin did not address the interaction between a state’s identification of EHBs and the general prohibition against annual and lifetime dollar limits.
New Guidance/New Questions
In addition to clarifying various matters relevant to state insurance exchanges and insurance coverage in the individual and small group markets, the new FAQs start to consider some of the unanswered questions about the prohibition against dollar limits. While these answers provide clear guidance in some respects, they create uncertainties in others. For example, one FAQ makes it clear that health insurance issued in the small group market in a state where an employer has its primary place of business cannot apply lifetime and annual dollar limits to any benefits that are regarded as EHBs in that state (based on the applicable benchmark plan for that state). This guidance is helpful in the small group market, where an employer’s principal place of business will typically match the state in which insurance is issued, but less helpful in identifying the benchmark plan in the larger group market where, for example, a group health plan may cover the employees of several related employers with principal places of business in different states.
With regard to insured plans, health insurers will need to make determinations as to the benefits that will be offered. It appears as if an employer with a self-funded plan will need to sift through a number of different available options to determine which plan will serve as its benchmark for EHBs. The employer will need to address a number of issues, which might include state benefit mandates, the requirement to offer pediatric dental and vision coverage and coverage for habilitation services, and the possibility of diverting from the benchmark plan by providing actuarial equivalent coverage for a particular type of benefit.
Group health plan sponsors may expect further guidance on this subject. Data is currently being collected to identify the potential benchmark plans that will be available for 2014 and 2015. In the interim, at least until final regulations are issued, employers should keep in mind the government’s “good faith” enforcement position that applies to reasonable efforts to identify EHBs.