Essential Health Benefits

On February 20, 2013, the U.S. Department of Health and Human Services (HHS) issued a final rule that set the accreditation standards for qualified health plans (QHPs)—plans that will be offered through the Health Insurance Marketplace. QHPs must offer essential health benefits (EHB) coverage to be accredited to sell on the Marketplace. The Patient Protection and Affordable Care Act also directs EHBs to be equal in scope to benefits offered by a "typical employer plan" and they must include items and services within 10 categories, such as prescription drugs and pediatric services—including oral and vision care.

HHS gave states the flexibility to define their own essential health benefits in a way that would best meet the needs of their residents. Twenty-six states selected a benchmark plan for their state, and the largest small business plan in each state will be the benchmark for the rest. If a benchmark plan is missing any of the 10 categories of benefits, the final rule provides direction on how the state, or HHS—where the default base-benchmark plan applies—will supplement the benchmark plan in that category.

Accreditation Timeline

Each Federal or Partnership Exchange or Marketplace will accept existing health plan accreditation from a recognized accrediting entity on an issuer's commercial or Medicaid lines of business. QHP issuers that do not have existing accreditation must schedule an accreditation review in their first year of certification, and are required to be accredited on their QHP policies and procedures in their second and third years. By the fourth year, all QHP issuers must be accredited on the basis of local performance of their QHP.

Actuarial Value

Actuarial Value, or AV, is calculated as the percentage of total average costs for covered benefits that a plan will cover. Beginning in 2014, non-grandfathered health plans in the individual and small group markets must meet certain AVs, or metal levels: 60 percent for a bronze plan, 70 percent for a silver plan, 80 percent for a gold plan and 90 percent for a platinum plan. The actuarial value may vary by two percentage points. To streamline and standardize the calculation of AV for health insurance issuers, HHS is providing a publicly available AV Calculator. The AV Calculator is posted on the Center for Consumer Information & Insurance Oversight website. Issuers may also offer catastrophic-only coverage to two types of eligible individuals, those who are 30 years or younger and those who received an exemption from the individual responsibility payment because they cannot afford minimum essential coverage or because they are eligible for a hardship exemption.

Starting in 2014, all types of health insurance will include an annual limit on out-of-pocket cost sharing for individuals and families. While not yet set for 2014, the comparable limit calculated for 2013 is $6,250 for self-only coverage. HHS anticipates future rulemaking and regulatory guidance regarding the application of cost-sharing to the group market.

HHS published the final rule in the Federal Register on February 25, 2013.