Essential Health Benefits

The Affordable Care Act (ACA) requires fully insured small group and individual health plans (both on and off the public exchange/Marketplace) provide coverage for a core package of health care services, known as "essential health benefits" (EHBs). This rule is intended to balance comprehensiveness and affordability for consumers by ensuring essential services are covered and consumer out-of-pocket expenses are limited.

EHB categories

In addition to the standard 10 EHB categories detailed below, states may include additional benefit requirements under their own state regulations or within a state's selected benchmark plan.

1. Ambulatory patient services
2. Emergency services
3. Hospitalization
4. Maternity and newborn care
5. Mental health and substance abuse disorder services (including behavioral health treatment)
6. Prescription drugs
7. Rehabilitative and habilitative services and devices
8. Laboratory services
9. Preventive and wellness services and chronic disease management
10. Pediatric services, including oral and vision care

Any health plan that covers EHBs must cover these benefits with no annual limits or lifetime maximums. This includes self-insured and large group plans (having 51 or more employees). Effective January 1, 2017, plans that offer out-of-network benefits on EHBs may no longer place limits or maximums on those benefits.

Out-of-pocket limits on EHBs

Out-of-pocket (OOP) consumer spending, which typically includes deductibles, copays and coinsurance, is limited for in-network essential health benefit services. The OOP spending limits are adjusted annually:

2020 OOP Maximums

• $8,150 for individual
• $16,300 for family

2021 OOP Maximums

• $8,550 for individual
• $17,100 for family

State benchmark plans

Effective Jan. 1, 2014, each state selected a benchmark plan that was to be used through the 2016 plan year. States had the option to select a new benchmark plan to use for plan years on and after Jan. 1, 2017.

For plan years beginning on and after Jan. 1, 2020, states have greater flexibility in selecting their benchmark plans. States may follow current rules and maintain 2017 benchmark plans, or they may select a new EHB benchmark plan annually from one of the following three options:

• Choose another state's 2017 benchmark plan - allows states to select another state's 2017 benchmark plan, and implement the plan benefits and limits to their own EHB standards, such as changing benefits with dollar limits to non-dollar limits.
• Replace one or more of the 10 required EHB categories of benefits under its current 2017 benchmark plan with the same categories from another state's 2017 benchmark plan - giving states the ability to make precise changes to their 2017 benchmark plans at the coverage detail level. For example, State A may select the prescription drug coverage EHB from State B, which uses a different drug formulary.
• Otherwise select a new set of benefits to become its benchmark plan - provided the plan meets other specified requirements.

The three options are subject to additional requirements, including two scope of benefits conditions. States must affirm that their new/modified benchmark plan provides a scope of benefits that is equal to, or greater than, the scope of benefits provided under a "typical employer plan," and is no more generous than the most generous of a set of comparison plans.

It's important for employers who sponsor group health plans to understand which benchmark plan they must follow so they know which benefits cannot have annual or lifetime limits. The state benchmark plan is determined differently based on the plan's funding type:

• Employers that self-insure their plans can choose a state to use for their benchmark plan.
• Employers with insured plans must use the benchmark plan of employer's contract/situs state, except for HMO plans which must follow the HMO plan state.