Health Care Reform

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Health Care Reform: The Question of Essential Benefits

United States , New York



As employers strive to comply with some initial health care reform mandates, many remain puzzled about a provision that could have significant impact on their future health benefit spending.


“Essential health benefits” make up part of the health care reform law’s mandates to broaden affordable access to adequate health coverage. All group health plans must remove lifetime dollar limits and must gradually eliminate annual dollar limits on essential health benefits. Under future reforms, group health plans’ annual benefit summaries will have to delineate essential and other benefit offerings, and all qualified health plans sold through state-based insurance exchanges will have to cover essential health benefits.


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. The law only provides some general categories of services and directs regulators that any definitions of essential health benefits must reflect the scope of benefits offered in the “typical” employer plan.


Regulators have said that they are working toward giving further guidance later this year. Until further guidance is issued, regulators will take into account good faith efforts to comply with a “reasonable interpretation of the term ‘essential health benefits.’”


To help employers make informed decisions and reasonable interpretations of the scope of benefits offered in a “typical” plan, Mercer surveyed nearly 800 employers about 26 specific health care services and items. We asked whether each service was covered under the plan in 2010 and whether any special benefit limitations applied. If an annual benefit dollar limitation was used, we asked about the amount. Finally, we asked whether employers with benefit limits in place had made changes for their 2011 plan year.


Because health plan coverage can vary significantly by employer size, the results were analyzed for employers with fewer than 500 employees (157 respondents), 500–4,999 employees (401 respondents) and 5,000 or more employees (221 respondents).


Copies of the survey report are available from local Mercer consultants. Journalists may contact the US press office for copies.


About Mercer
Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits. It is a leader in benefit outsourcing. Mercer’s investment services include investment consulting and multi-manager investment management. Mercer’s 20,000 employees are based in more than 40 countries. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York and Chicago stock exchanges. For more information, visit www.mercer.com.