The Affordable Care Act requires insurers to provide a minimum level of coverage to all of their members. The Department of Health & Human Services refers to these 10 categories of benefits as Essential Health Benefits (EHB).
Beginning in 2014 all non-grandfathered plans in individual and small group markets must provide coverage for each category of EHB. Furthermore, HHS regulations state that any health plans subject to PPACA, even those not required to offer EHB coverage, can no longer impose lifetime dollar limits on EHBs. Plans not required to begin including essential health benefits must cap annual cost sharing limits and meet actuarial and minimum coverage value levels.
The Essential Health Benefits are organized into 10 categories:
- Ambulatory patient services
- Emergency services
- Laboratory services
- Maternity and newborn care
- Mental health and substance abuse services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Preventative and wellness services and chronic disease management
- Pediatric services, including oral and vision care
Cost Sharing Limits
HHS’s provisions include regulations on the annual limit of cost sharing. Cost sharing includes deductibles, copayments, co-insurance and other employee out-of-pocket (OOPM) expenses. In 2014, the cost-sharing limit will be $6,400 for self-only coverage and $12,800 for other coverage tiers. Deductibles for small group plans are subject to a separate limit of $2,000 for self-only and $4,000 for other tiers. All cost-sharing for essential health benefits must accumulate towards the OOPM maximum.
Actuarial Value of Coverage as Metal Level Plans
HHS regulations use a metal representation to label the level of health plan coverage. Bronze coverage covers 60% of the actuarial value of expenses; Silver covers 70%; Gold covers 80% and Platinum covers 90% actuarial value. In order to calculate health plan levels, HSS has provided an actuarial value calculator via its website.
Minimum Value Calculations
Self-Funded group health plans covering at least 50 fulltime employees, or the equivalent, must cover at least 60% of the total allowed cost of healthcare in order to satisfy the employer mandate. To calculate the value of coverage employers provide, HHS has also provided an online minimum value calculator.
State Benchmark Decision
In December of 2012, the HSS required each state to choose any one of the four benchmark plans as a guide for individual and small group EHB plan requirements issued in the state. If the state did not choose a plan, the default plan applies. The default benchmark plan is the largest plan by enrollment in the largest product in the state’s small group market.
The four benchmark plans are:
- One of the three largest small group plans in the state, measured by enrollment.
- One of the three largest plans covering state employees, measured by enrollment.
- One of the three largest plans covering federal employees, measured by enrollment.
- The largest HMO plan offered in the state’s commercial market, measured by enrollment.
Large Group, Self-Funded and Grandfathered Plans
The requirement to add Essential Health Benefits applies to only non-grandfathered Individual plans and non-grandfathered fully insured small group plans inside and outside of exchanges. That said, large group fully insured plans, self-funded ASO plans and grandfathered plans are not required to add Essential Health Benefits. These plans are the least impacted by EHB, but are still held accountable to meet cost-sharing limits and coverage value requirements.
Currently, less than 2% of existing health plans meet the ACA Essential Health Benefits standards according to a study by HealthPocket. HealthPocket reported that health plans covered about 76% of ACA’s Essential Benefits on average. Covered benefits include hospitalization, emergency care and ambulatory services; but children’s dental and vision care, maternity care and substance abuse coverage were among the missing categories. Industry specialists share concerns of this coverage expansion causing premiums to spike. A number of other factors, such as guaranteeing eligibility to people with pre-existing conditions and ACA’s actuarial value requirements on out of pocket maximums also raise cost concerns. For more information on Essential Health Benefits, click here.