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.
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