The U.S. Department of Health and Human Services recently issued guidance on essential health benefits to address insurance providers' and other stakeholders' questions about what coverage is required under the Patient Protection and Affordable Care Act (PPACA).
The PPACA mandates that most individual and small group health plans provide coverage of essential health benefits, to be determined by the state regulating the plan. This will be done by using a benchmark plan that establishes a standard of insurance.
States may use one of the three largest federal employee plans as a baseline, one of their own three largest plans, one of the three largest small group plans in the state or the single largest HMO plan in the commercial market.
HHS clarified that the same benchmark must be used for individual and small group plans and that insurance issuers can substitute equivalent services for the benchmark plan, allowing some latitude for policy design.
State policies may lead to varying employee benefit plan administration and selection practices. Law professor Timothy Jost told the Society for Human Resource Management the future is still not entirely clear, although the information from HHS does allow a better understanding of how health coverage will work in the future. He also noted that a national set of rules would likely have been less complex.
