ACA Essential Health Benefit Changes: Why Employers Should Pay Attention

The most visible change in essential health benefits involves routine adult dental services.

Several years ago, federal regulators created a pathway for states to update their essential health benefit benchmark plans to include routine non-pediatric dental coverage starting in 2027. The new final rule reverses this approach. Beginning with the 2027 plan year, health insurance issuers will be prohibited from classifying routine adult dental services as an essential health benefit. This does not prevent employers from offering adult dental coverage. Most employers will continue to provide dental benefits through separate group dental plans, voluntary benefits, or other arrangements. The change is really about how the benefit is classified under the ACA.

That classification matters because essential health benefits receive specific protections. Plans generally cannot impose annual or lifetime dollar limits on covered benefits that are considered essential health benefits, and those benefits may also factor into applicable cost-sharing requirements.

For many employers, this change will not significantly alter the benefits offered. However, it should prompt a review of plan documents, summaries, employee communications, and vendor materials to ensure adult dental coverage is not incorrectly described as an essential health benefit.

For a fully insured small-group plan, the carrier is generally responsible for making sure the insurance policy covers the state’s essential health benefit benchmark.

This offers employers a meaningful level of protection, but ongoing oversight remains necessary.

Employees typically contact HR, not the insurance carrier, with questions about benefit changes. Employers should be prepared to explain whether these changes affect their plan, dental coverage, or an employee’s individual Marketplace options.

Employers should also ensure that benefit summaries, enrollment materials, and employee communications accurately describe the coverage offered. While the carrier manages the insurance contract, the employer remains responsible for clear communication to employees.

This issue is even more significant for self-funded employers.

Large-group and self-funded health plans are generally not required to cover every essential health benefit. However, when the plan does cover a benefit that qualifies as an essential health benefit, ACA protections related to annual and lifetime dollar limits continue to apply.

This is a common area of risk for employers.

Self-funded employers may assume their TPA automatically reviews every plan limitation for ACA compliance. In practice, many TPAs administer the plan according to the employer’s plan document and selected benefit configuration. While the TPA may identify issues, the employer, as plan sponsor, is ultimately responsible for plan design decisions.

* Which benefits are being treated as essential health benefits; * Which state benchmark plan is being used for EHB purposes; * Whether any annual or lifetime benefit limits are included; * How the plan’s out-of-pocket maximum is being applied; and * Whether the plan document, summary plan description, and administrative systems are consistent.

A better question is, “Has someone reviewed our plan design, plan document, and administration to confirm this is being handled correctly?”

The final rule also strengthens several Marketplace eligibility and income-verification requirements.

For example, Exchanges will be required to perform additional verification when available data shows an applicant’s household income is below 100% of the federal poverty level. Exchanges will also no longer be required to accept an applicant’s income attestation if the IRS does not return household tax data. These may seem like individual-market issues, but they can still affect employers. Employees participating in an individual coverage HRA, or ICHRA, use employer-provided funds to purchase individual health insurance. Employees receiving a qualified small employer HRA, or QSEHRA, may also purchase individual coverage and potentially interact with Marketplace eligibility rules.

More rigorous verification may require some employees to provide additional income documentation, resolve data inconsistencies, or address questions about their eligibility for advance premium tax credits.

Employers should not provide personal tax advice. However, they should be prepared to explain how the employer’s HRA works, what information they can provide, and where employees can seek assistance with Marketplace or tax-credit questions.

The final rule also confirms that certain ICHRA participants who qualify for a hardship exemption may use ICHRA funds for catastrophic-plan premiums, subject to applicable ICHRA rules. CMS cautions that catastrophic plans may not suit individuals with ongoing or complex healthcare needs due to significant upfront cost exposure. This highlights the need for employers offering an ICHRA to review employee education. Providing more options is only helpful when employees understand the financial and coverage differences between them.

Another provision receiving attention involves state-mandated benefits.

Beginning with the 2028 plan year, states will be required to pay the cost of benefits they mandate in addition to essential health benefits, even if the mandate has been added to the state’s EHB benchmark plan. This change does not begin in 2027, but employers and carriers should monitor how states respond. State decisions about mandated benefits and benchmark plans can eventually affect premiums, plan offerings, and the benefits available in fully insured individual and small-group markets.

Employers do not need to be experts on every section of the annual federal Marketplace rule. However, they need a process to identify which changes affect their plan and employees.

* Confirm whether routine adult dental services are referenced as essential health benefits in any plan materials; * Review the EHB benchmark used by a self-funded plan; * Identify annual or lifetime dollar limits that could apply to EHBs; * Confirm that plan documents and administrative systems are consistent; * Review ICHRA or QSEHRA employee communications; * Prepare HR to answer basic Marketplace-related questions; and * Document who is responsible for reviewing future regulatory changes.

Employers should also ask vendors to explaEmployers should also ask vendors to clearly explain their role. A vague statement that a vendor “handles compliance” is insufficient. Employers should understand which compliance responsibilities are included, which are excluded, and which decisions remain with the plan sponsor. Adult dental provision may not materially change most employer health plans. That is not the most important takeaway.

The bigger issue is that health plan rules continue to evolve, and those changes do not always fit neatly into categories such as “carrier responsibility,” “Marketplace issue” or “TPA responsibility. For employers, especially those sponsoring self-funded plans, good governance means understanding where responsibility begins and ends. It requires reviewing the plan rather than assuming someone else has done so, and ensuring employee communications accurately reflect plan coverage.

The employers that manage these changes best will not necessarily be the ones with the largest compliance departments. They will be the ones with a clear process, well-defined vendor accountability, and advisors who help translate regulatory changes into practical decisions.