T he Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended) includes many provisions that apply to health plans offered in the private health insurance market. The private market often is described as having three segments: the non-group, small-group, and large-group markets; and many of the ACA's provisions focus specifically on the non-group and small-group insurance markets. These reforms are intended to address perceived failures in those markets, such as limited access to coverage and higher costs of coverage relative to the large-group market pl ans, and to provide some parity with the large-group market. For example, benefit coverage in non-group and small-group market health plans generally was perceived to be limited in comparison to benefit coverage in large-group market health plans. Thus, to provide some similarity to plans in the large-group market, the ACA requires non-group and small-group health plans to offer the essential health benefits (EHB), which is a core package of health care services. The EHB are one of the three components of the EHB package. The EHB package requires plans to (1) cover certain benefits (i.e., the essential health benefits); (2) comply with specific cost-sharing limitations; and (3) meet a certain generosity level. This report provides an overview of the first component of the EHB package—the essential health benefits. The report examines how the EHB are defined, regulations related to the EHB, state variation in the EHB, applicability of the EHB to health plans, and how the EHB interact with other ACA provisions. Since 2014, all non-grandfathered plans in the non-group and small-group markets are required to offer a core package of health care services, known as the EHB. The ACA does not specifically define this core package. Instead, it lists 10 benefit categories from which benefits and services must be included (see Figure 1 ) and requires the Secretary of the Department of Health and Human Services (HHS) to further define the EHB. The HHS Secretary has the purview to define and periodically update the EHB. However, in defining the EHB, the HHS Secretary must take a number of parameters into account. For example, the scope of the EHB is to be equivalent to the scope of benefits typically provided under an employer-sponsored insurance plan. To accomplish this task, the ACA requires the Secretary of the Department of Labor (DOL) to conduct surveys of employer-sponsored insurance plans to determine typical benefits and provide a summary of the findings to the HHS Secretary. The EHB are to be balanced among the 10 categories, without a weighted preference toward any category. The HHS Secretary cannot make any coverage decisions, determine reimbursement rates, establish incentive programs, or design benefits in ways that discriminate against individuals because of their age, disability, or expected length of life. Furthermore, the HHS Secretary must take into account the diverse health care needs of the population, which includes women, children, persons with disabilities, and other groups. The HHS Secretary is tasked with reviewing the EHB, and part of the EHB review process includes providing a report to Congress and the public. The report is supposed to assess whether enrollees are facing any difficulty accessing services, either due to coverage or cost, and to consider whether the EHB need to be modified or updated due to changes in medical evidence or scientific advancement. If any modifications are to be made, the HHS Secretary is to include in the report how the EHB would be modified. Consequently, the Secretary periodically may update the EHB based on issues identified during the review process. In December 2011, the Centers for Medicare & Medicaid Services (CMS) released a bulletin that outlined a reference plan approach for the EHB. This approach was based on employer-sponsored coverage in the current market. To define the EHB, HHS considered findings from the DOL's report that described the scope of benefits under a typical employer-sponsored plan. HHS also considered a report from the Institute of Medicine that recommended criteria and methods for determining and updating the EHB. The HHS Secretary outlined a process in which each state identified a single plan to serve as a reference plan on which most non-group and small-group market plans must base their benefits packages in terms of the scope of benefits offered (see Figure 2 ). These reference plans are known as EHB-benchmark plan s. The benchmark selection approach identified by the Secretary applied for the 2014, 2015, 2016, and 2017 coverage years. Each state's EHB-benchmark plan applied to non-grandfathered health plans offered in the non-group and small-group markets, both inside and outside the exchanges (also known as marketplaces ). For the 2014-2016 coverage years, the process required each state to select an EHB-benchmark plan based on plans available in the 2012 coverage year. For the 2017 coverage year, the process requires each state to update its EHB-benchmark plan based on plans available in the 2014 coverage year. States select a benchmark plan among the following four options: 1. Small-group market health plan . Any of the three largest small-group market health plans, by enrollment, in that state; 2. State employee health benefit plan . Any of the three largest employee health benefit plan options, by enrollment, available to state employees in that state; 3. Federal Employees Health Benefits (FEHB) plan . Any of the three largest national FEHB plan options, by aggregate enrollment; or 4. Non-Medicaid Health Maintenance Organization (HMO) . The largest insured commercial non-Medicaid HMO, by enrollment, operating in that state. If a state does not make a selection, the default EHB-benchmark plan is the largest health plan, by enrollment, in that state's small-group market. For 2014-2016, each state's benchmark plan was finalized in early 2013. Figure 3 maps the type of benchmark plan selected by each state. The EHB-benchmark plan for 45 states and the District of Columbia (DC) is the small-group market health plan. Three states selected a non-Medicaid HMO, and two states selected a state employee health benefit plan as their EHB-benchmark plans. No state selected an FEHB plan as its benchmark plan. For 2017, each state's benchmark plan was finalized in late 2015. Figure 3 maps the type of benchmark plan selected by each state. The EHB-benchmark plan for 46 states and DC is the small-group market health plan. One state selected a non-Medicaid HMO, and three states selected a state employee health benefit plan as their EHB-benchmark plans. No state selected an FEHB plan as its benchmark plan. According to the regulations, the EHB-benchmark plan had to provide coverage for all 10 EHB categories. However, a number of state benchmark plans did not include all 10 EHB categories. If the selected benchmark plan did not include items or services within a category, the plan had to be supplemented accordingly. Generally, if an EHB-benchmark plan did not cover 1 or more of the 10 EHB categories, the state supplemented the EHB-benchmark plan by adding that particular category in its entirety from another benchmark plan option (i.e., the small-group market health plan, state employee health benefit plan, FEHB plan, or non-Medicaid HMO options described in " State Selection of Benchmark Plans ," above). For states that did not select an EHB-benchmark plan and thus defaulted to an EHB-benchmark plan (the largest health plan, by enrollment, in that state's small-group market), HHS, if necessary, supplemented the state's EHB-benchmark plan. The default benchmark plan was supplemented in the following order: (1) the second-largest plan, by enrollment, in the state's small-group market; (2) the third-largest health plan, by enrollment, in the state's small-group market; and (3) the largest national FEHB plan by enrollment across states. CMS also released additional guidance for certain EHB categories. In a December 2011 bulletin, CMS noted that of the 10 EHB categories, 3 categories were lacking under "typical employer plans." These three categories were pediatric oral and vision services, habilitative services, and mental health and substance use disorder services. To address these issues, CMS outlined a separate supplemental process for pediatric oral and vision services and a separate determination process for habilitative services. Furthermore, CMS released additional guidance in regard to mental health and substance use disorder and prescription drug services. HHS outlined separate guidelines for supplementing pediatric oral and vision services. An EHB-benchmark plan that does not cover the pediatric oral and vision category is to be supplemented by adding the pediatric oral and/or vision services from either (1) the Federal Employees Dental and Vision Insurance Program (FEDVIP) plan with the largest national enrollment or (2) the benefits from a state's separate Children's Health Insurance Program (CHIP) plan with the highest enrollment, if a separate CHIP plan exists. For the 2014-2016 coverage years, 49 states and DC had to supplement their EHB-benchmark plans for pediatric oral services—25 states and DC selected a FEDVIP plan, and 24 states selected a CHIP plan as their supplementary plan type (see Figure 4 ). For pediatric vision services, 45 states and DC had to supplement their EHB-benchmark plans; 38 states and DC selected a FEDVIP plan, and 7 states selected a CHIP plan as their supplementary plan type (see Figure 4 ). For the 2017 coverage year, 32 states have to supplement their EHB-benchmark plans for pediatric oral services.