Essential Benefits

"Essential health benefits" is a key concept relative to the Affordable Care Act (ACA). This concept is important in determining an employer's responsibility to provide health coverage and what limits may or may not be imposed on that coverage. It is also the foundation for the coverage to be provided through the state health care exchanges.

 

Government Resources 


Frequently Asked Questions on Essential Health Benefits Bulletin, HHS, 2/17/12 

The Department of Health and Human Services (HHS) has released a document that provides illustrative information to complement the bulletin on essential health benefits (EHB) under the ACA released on December 16, 2011 (see below). Specifically, it provides a list of the products with the three largest enrollments in the small group market in each State using data from HealthCare.gov. It provides the names of the three largest products in each State ranked by enrollment. In addition, it provides a list of the top three nationally available Federal Employee Health Benefit Program (FEHBP) plans based on enrollment. This information is being provided to facilitate a better understanding of the intended approach to EHBs. 1/25/12  

HHS released a bulletin outlining the items and services known as "essential health benefits." The bulletin describes the approach that HHS intends to pursue in rulemaking to define these essential health benefits. Under the HHS approach, states would be able to select an existing health plan to set as a benchmark for the items and services included in the package. The options would be:

  • one of the three largest small group plans in the state
  • one of the three largest state employee health plans
  • one of the three largest federal employee health plan options
  • the largest HMO plan offered in the state's commercial market 

Plans could modify coverage as long as they do not reduce the value of coverage. States must also ensure the essential health benefits package covers items and services in at least ten categories of care, including preventive care, emergency services, maternity care, hospital and physician services and prescription drugs. Comments on the outlined approach are due January 31, 2012. 

 
Institute of Medicine Report
A new Institute of Medicine report provides the HHS with a set of criteria and methods to develop a package of essential health benefits that will cover many health care needs, promote medically effective services, and be affordable to purchasers. HHS decisions about which benefits warrant designation as essential should be made in a transparent manner that is informed by input from structured public discussions, added the committee that wrote the report. 

The ACA requires the Secretary of Health and Human Services (HHS) to define the "essential health benefits” for certain health plans. The Act further instructs the Secretary to ensure that the scope of the essential health benefits is equal to the scope of benefits provided under a typical employer plan. The Act requires the Secretary of Labor to conduct a survey of employer-sponsored coverage to determine the benefits typically covered by employers and to report the results of the survey to HHS. To meet its requirement, the Department of Labor (DOL) first looked to its ongoing survey of benefits—the Bureau of Labor Statistics (BLS) National Compensation Survey (NCS) and has issued a report to the HHS. 4/15/11  

The Institute of Medicine (IOM) has been charged with making recommendations on the specifics for the definition of "essential health benefits" under ACA. IOM's Committee on the Determination of Essential Health Benefits will hold five meetings to gather information before issuing its recommendation.

Analysis