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Reform Update: Essential Health Benefits

May 08, 2013

What are “essential health benefits”?

The ACA requires HHS to define an “essential health benefits package,” (EHB) which health insurance issuers in the individual and small group market must comply with. Under proposed rules, each state may select a “base benchmark” plan to serve as the basis for determining EHBs within that state. The coverage in this base benchmark plan will be supplemented as necessary to create a benefits package that provides 10 statutorily specified categories of benefits.

What are the EHB benchmarks currently proposed in each state? 

Information on the EHB benchmark plans currently proposed in each state can be found at

In the June 2010 IFR, the departments stated that, until essential health benefits are defined in regulations, they will take into account “good faith efforts” by group health plans and insurers to comply with a reasonable interpretation of the term “essential healthbenefits” for purposes of applying “restricted” annual limits for plan years that begin on or before January 1, 2014. The allowance for good faith efforts by a plan or insurer is intended to “fill the gap” until the essential health benefits are defined by HHS.

A plan’s interpretation of “essential health benefits” must be consistent for purposes of applying the ACA lifetime and annual limits. Consequently, a plan cannot both apply a lifetime limit to a particular benefit – taking the position that it was not an essential health benefit – and at the same time treat that particular benefit as an essential health benefit for purposes of applying the restricted annual limit.


What approach is Health Net using to define “essential health benefits”?

In order to determine a reasonable definition for “essential health benefits” while awaiting forthcoming official guidance from HHS, Health Net analyzed typical benefit offerings for HMO and PPO plans as well as mandated state benefits for states where they conduct business: California, Arizona, Oregon and Washington. Further, they reviewed mandated state benefits nationwide before determining their final list of “essential health benefits."

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