HHS Proposes to Allow States to Define “Essential Health Benefits”

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The U.S. Department of Health and Human Services (HHS) issued a bulletin on December 16, 2011, outlining and requesting comments on its proposed regulatory approach to allow states to define what is an “essential health benefit.”

The Patient Protection and Affordable Care Act (PPACA) has certain provisions that refer to “essential health benefits.” For example, group health plans and group health insurance issuers are prohibited from offering group coverage that imposes any lifetime limits on the dollar value of essential health benefits. The PPACA also prohibits (on a phased-in basis) group health plans from imposing annual dollar limits on essential health benefits. Grandfathered plans, health insurance plans offered in the large group market (although fully insured plans remain subject to state insurance law) and self-insured group health plans are not required to cover essential health benefits, but if they do they are subject to the annual and lifetime limit restrictions mentioned above. However, non-grandfathered plans in the individual and small group markets both inside and outside of the Exchanges, Medicaid benchmark and benchmark-equivalent, and Basic Health Programs must cover essential health benefits beginning in 2014.

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