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CCH® BENEFITS — 06/17/11

What Are “Essential” Health Benefits For Health Reform Requirements?

from Spencer’s Benefits Reports: For plan years beginning on or after Sept. 23, 2010, the Patient Protection and Affordable Care Act (ACA) bans all group health plans from applying lifetime and, ultimately, annual dollar limits on essential health benefits. In addition, all qualified health plans sold through state-based Health Insurance Exchanges will have to cover essential health benefits.

Regulations issued so far have provided a few categories of medical services and items that are considered as “essential health benefits,” but they also specify that any definitions of essential health benefits must reflect the scope of benefits offered in the “typical” employer plan.

Mercer conducted a survey of 779 employers “to help employers make informed decisions and reasonable interpretations of the scope of benefits offered in a ‘typical’ employer plan.” According to Mercer, “Employers that have had to make plan changes to comply with the dollar-limit requirements have found that it is often not obvious whether a particular service or item is an essential health benefit, and opinions differ.”

For 26 specific services, Mercer asked survey participants the following questions:

• Was the service covered in 2011?
• To what special benefit limitations is the service subject?
• What are the annual limits, if any, in terms of dollars, or number of days or visits?

Of the 26 specific health care services and items reviewed, ten services were covered in the health care plans of at least 90% of employers surveyed, while seven of the services were covered by half or fewer, Mercer found. The ten most prevalent covered services were: outpatient facilities, chiropractic services, skilled nursing facility, physical therapy, occupational therapy, home health care, durable medical equipment, kidney dialysis, hospice, and organ transplants. Outpatient facilities, kidney dialysis, and physical therapy were the services least likely to have coverage limits, Mercer found. The services most likely to have coverage limits were orthodontia (82% of employers providing the coverage), chiropractic services (72%), hearing aids (66%), and skilled nursing facilities (60%).

For 2011, few respondents that applied health care benefits limits made changes. Fewer than one-fourth of the respondents with coverage limits made changes, most commonly to drop special coverage limits, with some converting dollar limits to limits on the number of days or visits. The most common limit changes were made for organ transplants (45% of those making changes), outpatient facility charges (41%), and durable medical equipment and kidney dialysis (34% for each). In addition, coverage changes were made for two autism treatments, likely to comply with the Mental Health Parity and Addiction Equity Act of 2008.

For more information on the survey, Health Care Reform: The Question of Essential Benefits, visit http://www.mercer.com.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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