Essential Health Benefits
Section 1032 of the Affordable Care Act (ACA), also known as the "Obamacare" legislation, defines the following categories of benefits that individual and small business insurance plans must cover by January 1, 2014:
1. Ambulatory patient services (these include outpatient services such as doctor office visits).
2. Emergency services (these include care received in an Emergency Room).
3. Hospitalization (these include medically-necessary surgeries and other inpatient procedures).
4. Maternity and newborn care.
5. Mental health services.
6. Substance use disorder substances (these include behavioral health treatment).
7. Prescription drugs.
8. Rehabilitative and habilitative services and devices (rehabilitation covers services such as relearning how to walk after a stroke, while habilitative services involve learning a new skill such as speaking without a speech impediment).
9. Laboratory tests and services.
10. Preventive and wellness services and chronic disease management.
11. Pediatric services, including oral and vision care.
Health plans are allowed to impose cost sharing obligations on plan members for most essential benefits, but those that qualify under a category of preventative health services will be provided without any cost sharing.
States are given the authority under ACA to specify details around these essential benefits. Cost sharing for plan members will be limited by each plan’s need to cover sufficient benefit costs to qualify under the following four plan types: Bronze plan, Silver plan, Gold plan and Platinum plan. Surely, the writers of ACA like precious metals!
It is important to note that while these are categories of benefits that must be provided, health plans are not required to have unlimited coverage of all categories. Rather, health plans must offer benefits that are “substantially equal” to the ten essential health benefits. Plans will be able to adjust specific benefits, provided that all ten categories of essential benefits are still sufficiently covered.
More specific definition of the ten essential health benefits will be determined on a state-by-state basis. Each state may choose a benchmark from the following options:
· One of the three largest small group plans in the state
· One of the three largest state employee plans by enrolment
· One of the three largest federal employee health plan options by enrolment
· The largest HMO plan offered in the state’s commercial market by enrolment
If a state chooses not to make a selection, it will be held to the benchmark of the small group plan with the highest enrolment in the state.
The essential health benefits only apply to individual plans and small businesses. Large group plans will be expected to provide hospitalization and emergency services, physician and midlevel practitioner care, pharmacy benefits, and laboratory and imaging services.
What do these essential health benefits mean for us? First: a high probability of having more comprehensive coverage. One study made by HealthPocket.com shows that less than 2% of existing plans meet the new ACA Essential Health Benefit Standards. On average, existing health plans in the study provided 76% of the Essential Health Benefits, with the missing 24% generally concentrated around several categories: pediatric dental and vision coverage, maternity, prenatal, delivery, postnatal, substance abuse and mental health coverage.
Of course, insurance premiums will likely increase due to the expansion of plan benefits. A major factor even more likely to increase premiums starting next January 1st is the ACA's guaranteed issue requirement mandating that people with pre-existing health conditions can sign up for a health plan at any time. Add to that the ACA's actuarial value requirements on the maximum out-of-pocket costs that can be charged, and we may be looking at some hefty premium increases for those who buy their insurance without a government subsidy! That will be the subject of another post.
Until next time,
Andrew Herman, President
AH Insurance Services, Inc.