Question:
What are essential health benefits under the ACA and which plans are affected?
Answer:
The Affordable Care Act (“ACA”) requires non-grandfathered health insurance plans in the individual and small group markets to cover essential health benefits (“EHB”) which include items and services in at least the ten benefit categories indicated in the table below. In general, the items and services included in a state’s benchmark plan comprise the EHB that insured health plans in the state’s individual and small group markets must cover.
Categories of Essential Health Benefits
- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health and substance use disorder services including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
The ACA also requires all non-grandfathered health plans to comply with an out-of-pocket maximum with respect to their coverage of EHB. This cost-sharing limit includes deductibles, copayments, coinsurance and similar charges required to be paid by or on behalf of the enrollee (but excluding monthly premiums and often also excluding out-of-network costs). Once the out-of-pocket maximum is reached for the year, the enrollee cannot be responsible for additional cost sharing associated with EHB respecting the then-current plan year.
The ACA also prohibits health plans from imposing lifetime and annual limits on the dollar value of EHB.
The following table reflects the ACA’s application of these EHB requirements:
| Requirement | Applies To | Does Not Apply To |
|---|---|---|
| EHB package | Non-grandfathered insured health plans in the individual and small group markets | Grandfathered health plans, self-insured group health plans, health plans in the large group market |
| Out-of-pocket maximum for EHB | All non-grandfathered plans, including self-insured group health plans and insured health plans of any size* | N/A |
| Prohibition on lifetime and annual limits on the dollar value of EHB | All group health plans, even those with grandfathered status | Certain excepted benefits |
*Health insurance coverage offered in connection with these plans that are not required to provide the EHB package (i.e., self-insured health plans and health plans in the large group market) may select among any of the 51 EHB base-benchmark plans selected by a state or the District of Columbia, plus the three base-benchmark options under the Federal Employees Health Benefit Program (“FEHBP”), for purposes of determining which benefits are subject to the out-of-pocket maximum and prohibition on lifetime and annual dollar limits.
Action:
Employers should review their health plans to ensure that they are covering EHB (as applicable) and confirm that their plan does not exceed the out-of-pocket maximum for EHB. They will also need to verify that they do not include a lifetime or annual limit associated with the dollar value of EHB.
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