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Bulletin Clarifies Limit Prohibitions On Essential Benefits

One goal of the Patient Protection and Affordable Care Act (PPACA) is the elimination of annual and lifetime dollar limits on essential health benefits. Previously, such limits sometimes resulted in a patient losing coverage when the cost of care extended beyond limits that the insurer had established to protect against excessive expense relative to premiums collected. The unfortunate consequence of severely ill patients losing coverage was not only an extreme hardship for the families involved but also a public relations nightmare for insurance companies, health & welfare plans and trustees.

Under PPACA, group health plans, including LIUNA’s health and welfare funds, may no longer impose a lifetime dollar limit on essential benefits for plan years that began on or after September 23, 2010. Most plans eliminated these limits in 2011.

PPACA also barred annual dollar limits for plan years on or after January 1, 2014, while imposing rising amounts of dollar limits in the interim. Until September 23, 2012, the maximum annual dollar limit is $1.25 million; it rises to $2 million until January 1, 2014; and no annual limits are permitted in 2014 and beyond. If a group plan was grandfathered or obtained a waiver, it will expire for the plan year beginning on or after January 1, 2014.

While essential benefits can have no dollar limits, they may have limits related to visits, frequency and networks. Health care services that are not considered to be essential may have dollar limits.

Thus, a key question for group plans is what constitutes an essential benefit?

As health plans vary considerably in their details, the establishment of standards that clearly delineate what are essential services is vital but complex. To that end, the Center for Consumer Information and Insurance Oversight (CCIIO) of the Department of Health and Human Services (HHS) issued a bulletin and a set of frequently asked questions. Together, these documents provide guidance to help group plans determine which benefits can or cannot have pertaining limitations.

PPACA defines ten categories of essential benefits:

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services
  • Prevention and wellness services and chronic disease management
  • Pediatric services (including oral and vision care)

Since there is room for disagreement about whether a particular policy benefit is essential within the meaning of the list, the CCIIO bulletin provides direction to states in selecting a “benchmark plan” to use as a reference. In general, “benchmarks” are the largest, most comprehensive plans offered in the state.

In some cases, the bulletin and FAQ provides additional guidance for benefits with which plan sponsors have struggled when making essential benefit determinations. Among these are pediatric oral and vision care, orthodontia, mental health/substance use disorder care, habilitative services and prevention benefits. Plan sponsors should review the bulletin and FAQ as they assess whether benefits presently offered with annual or lifetime dollar limits are essential or not. They should also watch for further guidance from HHS in the months ahead.

The LHSFNA’s Health Promotion Division is monitoring regulatory developments related to PPACA and its implementation. Updates are published on the Fund’s Health Care Reform Updates page.

[Steve Clark]

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