- On April 14, 2017
As Congress and President Trump continue efforts to repeal and replace the Affordable Care Act (ACA), the law’s mandate that some health plans cover essential health benefits (EHBs) has become a focal point of health reform negotiations. Proponents of eliminating or changing EHBs argue they are artificially driving up the cost of private health insurance premiums. Those in support of the EHBs say without them, health insurance policies would not cover key services needed for people’s well being. What is not always clear, though, is how EHBs impact different types of coverage, including employer-based plans. To help you better understand how changes to EHBs could potentially affect your plan, Kistler Tiffany Benefits has prepared this overview.
What are the essential health benefits?
The essential health benefits are a list of ten broad categories of medical care services. The ACA requires that all non-grandfathered individual and fully-insured small group health insurance policies sold in the United States include these broad categories of care to the same extent an average employer plan would. Each state was given some authority to determine what an average employer plan looks like in their area, which is known as the “state benchmark plan.” All individual and small group insurance carriers must also cover EHB services at standard levels of generosity. This structure forms the basis of the “metallic levels” of coverage, also known as the Bronze, Silver, Gold, and Platinum plans.
Here is the list of the ten EHBs:
· Outpatient care without a hospital admission
· Emergency services
· Pregnancy, maternity, and newborn care
· Mental health and substance use disorder services, including counseling and psychotherapy
· Prescription drugs
· Rehabilitative and habilitative services and devices
· Laboratory services
· Preventive care, wellness services, and chronic disease management
· Pediatric services, including oral and vision care for children
Must all health plans cover essential health benefits?
No, large employer group plans and self-funded plans are not required to comply with the essential benefit requirements. However, if a large group or self-funded plan covers any specific category of EHBs, then they cannot place annual or lifetime dollar limit on that type of coverage. Limits on the amount of covered services, such as a limitation on a particular number of visits covered, may be permissible under certain circumstances.
Are the EHB requirements the same as the requirement that plans covered preventive care services without co-pays?
No, the EHB and preventive care coverage requirements are two distinct sections of the law, even though they are often confused. In addition to the specification that individual and small group plans cover the EHBs, the ACA specifies that all health insurance plans cover certain preventive care benefits without applying any cost sharing, including deductibles, co-payments, and coinsurance. Preventive services include certain immunizations, annual check-ups and well visits, and women’s health services. These requirements apply to all private plans – including individual, small group, large group, and self-insured plans, unless the plan has maintained grandfathered status. Preventive health services that must be covered with no cost sharing are broken up into three categories—children’s services, women’s services, and all adult services.
Would the American Health Care Act change or eliminate the ACA’s preventive care requirements?
No, to-date, the GOP plans to repeal and replace parts of the ACA would not change the law’s preventive care coverage requirement. Significantly, so far official proposals have not changed or eliminated the EHB requirements either, although the idea remains under consideration.
Why were EHBs established?
The original goal of requiring EHBs to be covered was to level the playing field between insurers and spread out risk, particularly in the individual market. Before the ACA was enacted, it was fairly common for insurers in the individual market to offer plans excluding certain EHBs or charge more for those services including maternity care, substance abuse, and mental health treatment. Individual insurance also did not have to be issued to people with preexisting conditions. Now that the ACA requires that all coverage be issued without considering preexisting conditions, the requirement that individual and small group insurers cover a standard and broad range of benefits helps prevent people from selecting a certain insurance carrier just for its coverage of a specific medical service they may need.
Would changes to, or elimination of, the EHBs save employer plans money?
Under the ACA, large employer plans with 50 or more employees and self-funded plans are not required to include coverage of all of the EHBs, so any change to those requirements would not have a cost or structural impact on large group and/or self-funded coverage. For small-employer plans, changes to the EHBs could provide the ability to offer pared-down coverage at a reduced rate. Most of the EHBs are standard benefits everyone would expect to be in an employer-based plan, but some others, like pediatric vision coverage, were historically optional benefits that many employers excluded. Since the ACA ties EHB requirements to the metallic level plan options, it is possible that the small group plan design structure of bronze, silver, gold, and platinum plans could change too. If the metal requirements changed or disappeared, small employers would have more flexibility in overall plan design and could potentially reduce costs that way. The market most likely to be impacted by any changes to the EHB requirements is the individual insurance market. Prior to enactment of the ACA, less generous individual benefit plans were relatively popular products.
If the essential health benefits are removed from the ACA or changed, can plans still include these services?
Yes, a change to the federal health benefit requirements would just lower the baseline coverage standard of coverage insurers would be required to provide for individual and small group policies, not prevent insurers from offering plans with those services. However, the type and quantity of individual and small group plans that cover all medical benefits included on the list in the manner as proscribed now would be based on market demand. Large employer plans and self-funded plans would be unaffected and could cover medical care services as they do today.
By Jessica Waltman, Special Contributor
Jessica Waltman is a health reform strategist, with more than 20 years of experience in health insurance markets and health policy. She is the former Senior Vice President, Government Affairs, for the National Association of Health Underwriters.