ESSENTIAL HEALTH BENEFITS – What are they and who do they apply to?
Beginning on the first anniversary on or after January 1, 2014, all health insurance issuers offering non-grandfathered health insurance coverage in the individual and small group markets must ensure that such coverage includes the Essential Health Benefits Package (EHB Package). Self funded and large group plans do not have to comply with the EHB Package requirements but do have certain other requirements that are addressed in this document and other A.I. Group communications.
Components of the Essential Health Benefits (EHB) Package
All Health Insurance Plans subject to the EHB requirement must comply in three areas:
1. Covering Essential Health Benefits
Essential Health Benefits (EHB) are a standard set of services and coverages a health insurance policy must cover. For 2014 and 2015, The Department of Human Services has defined EHB by reference to a “benchmark plan” that each state will select. The benefits reflect the scope of services covered by a typical small employer plan in that state or nationally.
Both individual and small group policies offered in and outside the Health Insurance Exchange must include the Essential Health Benefits. The EHB includes the following 10 benefit categories:
1. Ambulatory patient services
2. Emergency services
4. Maternity and newborn care
5. Mental health and substance use disorder services, including behavioral health treatment
6. Prescription drugs
7. Rehabilitative and habilitative services and devices
8. Laboratory services
9. Preventive and wellness services and chronic disease management
10. Pediatric services, including oral and vision care
2. Ensuring that coverage meets specified actuarial values
Plans subject to the EHB requirements must provide coverage meeting or exceeding a minimum value, or actuarial value. Essentially, the actuarial value of a plan is the result of a calculation indicating the total value or cost of a health plan. To meet the requirement, a plan must pay at least 60% of the total cost of covered benefits under the plan. The maximum amount the member can pay through deductibles, coinsurance, copayments and other out-of-pocket amounts of all covered expenses (premiums not included) may be no more than 40%. This calculation is performed on the plan as a whole and not on an individual basis.
Under the law, the percentage a plan pays toward the covered expenses is expressed in levels, called “metal levels”. These metal levels are a general indicator of a plan’s payment percentage and are intended to help consumers more easily compare health insurance options. The minimum level allowed, where the plan must pay at least 60% of the total cost of the plan, is called a bronze plan. All insurers must design their health plans to come within a 2% +/- of the metal level in order to offer the health plan. The metal levels and percentages the plan pays of covered expenses are:
- Platinum Plan: The Health Plan pays 90% of Covered Expenses
- Gold Plan: The Health Plan pays 80% of Covered Expenses
- Silver Plan: The Health Plan pays 70% of Covered Expenses
- Bronze Plan: The Health Plan pays 60% of Covered Expenses
For two types of individuals an additional “catastrophic” plan is also available. The plan’s availability is limited to only individuals who begin the calendar year under the age of 30 or those who cannot afford the “bronze” level plan. Further information on the “affordability” issue is available through other A.I. Group communications. As the law is written now, this plan will only be offered through the Health Insurance Exchanges.
3. Complying with Cost-Sharing Limitations
Health insurance plans must also comply with cost-sharing limitations. Cost-sharing is any portion of the covered expense the participant is required to fund such as deductibles, coinsurance, copayments or similar charges. Amounts that are balance billed for out-of-network services or charges not covered under the plan are not included in the cost-sharing limitation.
The following are the Cost-Sharing Limitations:
1. The maximum annual deductible for plans in 2014 will be $2,000 for self-only coverage and $4,000 for coverage including dependents. This only applies to the small group market (2-50 in Georgia for the years 2014 & 2015, then 2-100 beginning in 2016). Unlike most provisions that apply to both the small group and individual market, this rule has two notable exceptions:
a. The deductible limit does not apply to the Individual market.
b. If a health plan cannot reasonably reach the actuarial value for its “metal level” and comply with the deductible limits, the deductible may be higher. It is anticipated that “Bronze” level plans, which have a 60% actuarial value, may have difficulty in reaching the requirements at the deductible limit.
2. The out-of-pocket maximum may be no higher than the amount set for HSA-compatible high deductible health plans. The 2013 level is $6,250 for self-only coverage and $12,500 for any coverage including dependents. The anticipated level for 2014 is $6,500 and $13,000 – however, these figures have not been finalized.
3. Both cost-sharing limits above will be increased each year by the “premium adjustment percentage.” This is the percentage (if any) by which the average per capita premium for health insurance coverage in the United States for the preceding calendar year exceeds such average per capita premium for 2013. Regulators publish this percentage annually.
4. The annual limits on cost-sharing and deductibles do not apply to out-of-network services for plans that offer in & out-of-network benefits, nor do they include amounts paid for non-covered services.
Self Funded and Large Group Plans
Although self-funded plans and insured large group plans are not required to provide minimum value, failing to do so could subject the plan sponsor to penalties under the Employer Shared Responsibility provisions of the ACA. These penalties apply to employers with any employees who were not offered health coverage that met minimum value and affordability requirements, purchased coverage in an Exchange, and received a premium tax credit subsidy when they purchased health insurance coverage.
Large group, self-funded and grandfathered small group plans are not required to include most of the Essential Health Benefits Package, however, three components must be part of all plans, regardless of size or grandfathered status. These three areas are:
1. The out-of-pocket maximum may be no higher than the amount set for HSA-compatible High Deductible Health plans. The 2013 level is $6,250 for Self-only coverage and $12,500 for any coverage covering dependents. The anticipated level for 2014 is $6,500 and $13,000 – however these figures have not been finalized.
2. All Plans must provide coverage at no lower than the minimum value. Essentially, value means the plan pays at least 60% of the covered expenses with the participant paying no more than 40%. This is calculated on an overall basis and not per participant. This is the same level of coverage under the “Bronze” level of coverage that will be offered in the Health Insurance Purchasing Exchanges.
3. Plans may not include annual or lifetime limits on any Essential Health Benefits that are included in their plan.