ObamaCare Essential Health Benefits
What Are Essential Health Benefits?
Ten Essential Health Benefits must be offered at no dollar limits on every plan under the Affordable Care Act (ObamaCare). Essential Health Benefits consist of ten categories of items and services required on all individual and small group plans starting in 2014. Large Group Plans are not required to offer a essential benefits package, but most already do, as these benefits were defined from the coverage typically provided by large employers.
In general Essential Health Benefits are the types of care you need to prevent and treat sickness and do not include elective and "non-essential treatments", a full list of Essential Benefits under the Affordable Care Act with descriptions is provided below.
All plans sold on and off the Health Insurance Marketplace, small group plans, and Government healthcare options like Medicaid and Medicare starting January 1st, 2014 or later will offer at least ten Essential Benefits regardless of cost. You don't have to wait, you can buy coverage that starts and 2014 now. Find your State's Health Insurance Marketplace.
List of Ten Essential Health Benefits?
The Affordable Care Act's Ten Essential health benefits include:
- Ambulatory patient services (Outpatient care). Care you receive without being admitted to a hospital, such as at a doctor’s office, clinic or same-day (“outpatient”) surgery center. Also included in this category are home health services and hospice care (note: some plans may limit coverage to no more than 45 days).
- Emergency Services (Trips to the emergency room). Care you receive for conditions that could lead to serious disability or death if not immediately treated, such as accidents or sudden illness. Typically, this is a trip to the emergency room, and includes transport by ambulance. You cannot be penalized for going out-of-network or for not having prior authorization.
- Hospitalization (Treatment in the hospital for inpatient care). Care you receive as a hospital patient, including care from doctors, nurses and other hospital staff, laboratory and other tests, medications you receive during your hospital stay, and room and board. Hospitalization coverage also includes surgeries, transplants and care received in a skilled nursing facility, such as a nursing home that specializes in the care of the elderly (note: some plans may limit skilled nursing facility coverage to no more than 45 days).
- Maternity and newborn care. Care that women receive during pregnancy (prenatal care), throughout labor, delivery and post-delivery, and care for newborn babies.
- Mental health services and addiction treatment. Inpatient and outpatient care provided to evaluate, diagnose and treat a mental health condition or substance abuse disorder . This includes behavioral health treatment, counseling, and psychotherapy. (note: some plans may limit coverage to 20 days each year. Limits must comply with state or federal parity laws. Read this document for more information on mental health benefits and the Affordable Care Act).
- Prescription drugs. Medications that are prescribed by a doctor to treat an illness or condition. Examples include prescription antibiotics to treat an infection or medication used to treat an ongoing condition, such as high cholesterol. At least one prescription drug must be covered for each category and classification of federally approved drugs, however limitations do apply. Some prescription drugs can be excluded. "Over the counter" drugs are usually not covered even if a doctor writes you a prescription for them. Insurers may limit drugs they will cover, covering only generic versions of drugs where generics are available. Some medicines are excluded where a cheaper equally effective medicine is available, or the insurer may impose "Step" requirements (expensive drugs can only be prescribed if doctor has tried a cheaper alternative and found that it was not effective). Some expensive drugs will need special approval.
- Rehabilitative services and devices – Rehabilitative services (help recovering skills, like speech therapy after a stroke) and habilitative services (help developing skills, like speech therapy for children) and devices to help you gain or recover mental and physical skills lost to injury, disability or a chronic condition (this also includes devices needed for "habilitative reasons"). Plans have to provide 30 visits each year for either physical or occupational therapy, or visits to the chiropractor. Plans must also cover 30 visits for speech therapy as well as 30 visits for cardiac or pulmonary rehab.
- Laboratory services. Testing provided to help a doctor diagnose an injury, illness or condition, or to monitor the effectiveness of a particular treatment. Some preventive screenings, such as breast cancer screenings and prostrate exams, are provided free of charge.
- Preventive services, wellness services, and chronic disease treatment. This includes counseling, preventive care, such as physicals, immunizations and screenings, like cancer screenings, designed to prevent or detect certain medical conditions. Also, care for chronic conditions, such as asthma and diabetes. (note: please see our full list of Preventive services for details on which services are covered.)
- Pediatric services. Care provided to infants and children, including well-child visits and recommended vaccines and immunizations. Dental and vision care must be offered to children younger than 19. This includes two routine dental exams, an eye exam and corrective lenses each year.
While all qualified plans must offer the ten essential benefits, the scope and quantity of services offered under each category can vary. Each qualified plan must offer essential health benefits which overall are equal to the scope of benefits typically covered by employers, as shown by a Department of Labor survey of employer-sponsored coverage. (Ref: ACA, Section 1302 (b) (2) (a))
Read of the Affordable Care Act for yourself or check out our summary of provisions in the Affordable Care Act to get our summary on SEC. 1302 and other related rules for qualified health plans. You can also check out the official rules for Essential Health Benefits which defines how included benefits will work as this was not included in the law itself.
When Do Essential Health Benefits Start?
Under the Affordable Care Act Essential Benefits are offered on all qualifying plans starting January 1st, 2014.
Who Has Access to Essential Health Benefits?
All plans sold in individual and small group markets, including plans sold on and off the Health Insurance Marketplace, and Government healthcare plans like Medicaid and Medicare all include at least 10 Essential Benefits. Grandfathered plans from before the law was enacted in March 23, 2010, plans that will be discontinued in 2015 (2014 in some States), self-funded ASO (administrative services organization) plans, and large group plans don't have to offer Essential Benefits.
• In older plans, not offering these benefits can translate to lower premium costs (because they offer less benefits)
• Large group plans almost all already offer essential health benefits or their equivalent.
• All new Medicaid and Medicare plans must offer essential health benefits starting in 2014.
• Specific health care benefits may vary by state. Even within the same state, there can be small differences between health insurance plans
What Do Essential Benefits Cost?
Some Essential Benefits include no out-of-pocket costs (no cost sharing) and all Essential Benefits offer no annual or lifetime limits and have minimum cost sharing limits.
No Cost Sharing on Some Preventive Services
Essential Health Benefits include annual wellness visits and many types of preventive services including immunizations and screenings at no out of pocket costs. The Affordable Care Act has a major focus on wellness and prevention to help increase early detection and catch sickness before it starts increasing wellness and decreasing the need for costly treatments. (note: For preventive care to have no out-of-pocket expense it must be delivered by a network provider.) Get a full list of Preventive services covered under the Affordable Care Act.
No Annual Limits on Essential Health Benefits
There are no dollar limits on Essential Benefits. Before annual and lifetime limits over 60% of bankruptcies in the US were medical bankruptcies. Eliminating dollar limits on essential care ensures that patients won't have to stop treatment and/or go broke when they reach their dollar limit.
A Minimum Actuarial Value on All Coverage
There is a cap on out-of-pocket costs on all plans that cover Essential Benefits. Plans offering Essential Benefits must cover at least 60% of covered out-of-pocket expenses and must have reasonable out-of-pocket maximums (in other words a plan offering essential benefits must be at least the equivalent to a "bronze" plan sold on the marketplace.)
Plans must provide one of four levels of benefits, named "Bronze", "Silver", "Gold" and Platinum. Each designation represents an "actuarial value", which is calculated as the average % of total health costs they cover for a defined population). Bronze plans cover 60% on average, "Silver" 70%, "Gold" 80% and "Platinum" 90% of costs on average. For most individuals though a plan will pay far less than these percentages: this is because a high proportion of health care costs are incurred by a small number of very sick people, and once they reach the out-of-pocket maximums, the plan pays 100% of their extra costs.
In general, the higher the metallic level (i.e. Gold and Platinum), the more the plan will pay towards your healthcare expenses, but the higher your monthly premiums will be. Higher tier plans may also offer additional benefits that are not considered "essential". See Types of Marketplace Plans for more information.
Out-of-pocket Maximum (Limit)
Your out-of-pocket maximum (limit) is the most you pay during a policy period (usually a year) before your health insurance or plan begins to pay 100% of the allowed amount. This limit never includes your premium, balance-billed charges, or health care your health insurance or plan doesn’t cover. All cost sharing for Essential Benefits counts towards your out-of-pocket limit.
Please note that some plans don’t count your copayments, deductibles, coinsurance payments, out-of-network payments, or other expenses toward this limit. In Medicaid and CHIP, the limit includes premiums. The maximum out-of-pocket costs for any Marketplace plan for 2014 are $6,350 for an individual plan and $12,700 for a family plan.
Why Do I Need Essential Health Benefits?
In the past many plans offered sub-par coverage as a way to keep premium costs down. This would seem attractive until one actually needed care. This led to many cases of Americans paying for plans for years and then finding that they did not have access to the care they needed or hit a dollar limit and were denied treatment when they needed it most. Today all plans cover essential health benefits to ensure that we all get the care we need.
Why Do I Have to Pay For Benefits I Don't Need?
While most Essential benefits could be used by anyone, many benefits like Maternity services are included on all plans. One could argue a single male, who never has children, won't benefit from this directly (although it's easy to argue countless ways he benefits indirectly notably his mother, sisters, relatives, community, etc), leading to the obvious question, "why do I have to pay for something I don't need?"
In employment based group health insurance policies, all employees of a company pay the same premium, regardless of their individual health needs. So the premium younger workers pay helps subsidize the higher health costs of older employees. Although this means higher premiums for young employees, when employees get older they will benefit from this arrangement. Similarly male workers will pay premiums that include costs of maternity care and breast cancer, even though they are unlikely to need either. In insurance terms, all members of the group are considered as a "risk pool".
The Affordable Care Act creates a "single risk pool" in the individual and small group markets that mirrors the "risk pools" employees of large firms have enjoyed in the past. This means that regardless of what care you need, or may need, we all share the cost and the risk. This allows insurance companies to cover men at the same rate as women and sick people at the same rate as healthy people. Without a single risk pool insurance would still be unaffordable for many and preexisting conditions would not be covered. Since there is a single risk pool that splits the costs of Essential Benefits all Essential Benefits are offered to all insured.
How Do I Know if My Plan Covers Essential Health Benefits?
If you enrolled in an individual or small group plan after 2014 you most likely have access to Essential Health Benefits that follow the rules of the ACA. The same is true for Medicare and Medicaid.
The ACA contains exceptions for "grandfathered" plans, . These are plans that existed prior to the Act - March 23, 2010, provided that they have not changed significantly. Unfortunately most insurance plans change "significantly" almost every year, so few plans are "grandfathered".There are also special exceptions for self-insured groups, and student health plans. In addition both large employer group plans, and now individual plans, have been allowed to continue until 2015 unchanged.
Exceptions and Limits on Essential Health Benefits
There are some exceptions and limits on Essential Benefits, they are:
• Insurance companies can still put a yearly dollar limit and a lifetime dollar limit on spending for health care services that are not considered essential health benefits.
• Some health insurance plans may have received a temporary waiver from the rules on yearly dollar limits. Yearly limit waivers end with plan or policy years beginning in 2015 (2014 in some States).
• All non-grandfathered health plan must limit the total out-of-pocket costs enrollees pay for in-network.
• Health plans can still however set limits on the number of times you can receive a certain treatment.
• Large Group markets and self funded (ASOs) don't need to offer Essential Benefits.
Essential Benefits Facts
Here are some quick facts about Essential Health Benefits and the Affordable Care Act (ObamaCare):
• Cost sharing on Essential Health Benefits count towards your maximums.
• Aside from the Essential Health Benefits, plans may offer a number of additional benefits.
• Some plans may offer better cost sharing options on benefits subject to out-of-pocket cost sharing. In general the more "valuable" the metal, the higher the percentage of out-of-pocket costs covered by your insurer.
• Essential Health Benefits include the most commonly used health services like preventive services and annual wellness visits with no cost sharing.
• Essential Health Benefits include preventions and treatments you need if you get sick. This includes ongoing treatment for common serious sicknesses like cancer.
• There are no annual or lifetime limits on Essential Health Benefits. Before the ACA over 60% of all bankruptcies in the US were medical related, many due to the cost of treatment exceeding annual and lifetime dollar limits.
• The annual cost to society of substance use disorders alone is approximately $200 billion, yet only a fraction ($15 billion) is spent on treatment. The inclusion of mental health and substance use disorders services is projected to balance these numbers and reduce healthcare costs.
• Instead Essential Benefits, large employers only have to offer "Minimum Essential Coverage" without the act really defining what this is. This has caused some companies to adopt "skinny plans" with very limited coverage. There are no limits on out-of-pocket cost for services not covered! See http://www.kaiserhealthnews.org/Stories/2013/August/26/essential-benefits-bare-bones-health-insurance.aspx
Essential Benefits Myths
Here are some common myths about Essential Health Benefits and the Affordable Care Act (ObamaCare):
• There are no dollar limits on healthcare. Dollar limits still apply to non-essential treatments, essential benefits are covered at no dollar limits and must have reasonable out-of-pocket maximums.
• All Essential Benefits are "free". Only some preventive services have no out-of-pocket expenses. Other benefits may have reduced, or no, out-of-pocket expenses depending on the plan. Even a "free" service still comes with the cost of your monthly premium. See a list of all required "free" Preventive services.
• Abortions have to be provided on demand at public cost. False! The ACA Sect 1303 explicitly prohibits abortion from coverage as an "essential benefit" and confirms existing Federal and State prohibitions on use of public funds for abortion services. Insurers may voluntarily decide to include abortions in their plans: some plans only cover abortion services only in cases of life endangerment, rape, and incest. States who are providing their own health insurance marketplaces, prohibit coverage of abortion services. So far Arizona, Louisiana, Mississippi, Missouri, and Tennessee have banned coverage of abortions. The bans in Louisiana and Tennessee do not contain any exceptions. Missouri only allows coverage where a woman’s life is endangered, Arizona has a life and narrow health exception,and Mississippi allows coverage where a woman’s life is endangered or the pregnancy is the result of rape or incest. In addition – Idaho, Oklahoma, Kentucky, Missouri and North Dakota already ban health insurance companies from covering abortion except by optional rider. If an insurer offers abortion in cases other than life endangerment, rape or incest, then it must separate the cost of such coverage and charge a separate premium for such coverage. See http://www.dpc.senate.gov/healthreformbill/healthbill18.pdf
• Paying for care I don't need means higher premiums. This isn't a myth as much as a misunderstanding of how the law works. In order to make insurance affordable for all Americans a "single risk pool" is created. Since the risk is shared by all insurers, premium prices reflect not only the risk, but all benefits, rights, and protections offered by the Affordable care Act. The only way to provide affordable health insurance for the sick, is for the healthy to share the cost: after all you might become sick and need that help tomorrow, or next year, or in ten years time. This is the way employer group plans work. However, unlike employer group plans, marketplace plans for individuals allow a lower premiums for younger members, while limiting the maximum premium paid by the elderly to three times the premium for a young person. The only way to offer specific care to specific people for specific prices, would be to eliminate the ban on imposing annual and lifetime limits, the ban on gender and health discrimination, and the ban on denying coverage and treatment to people with preexisting conditions. As it stands now many people will pay less than they did before the law due to the aforementioned bans and subsidies, while many will pay more due to the way the new system works. Regardless all Americans buying new plans will have better benefits, rights, and protections on equivalent plans.
Essential Benefits Pros and Cons
Here is a quick list of pros and cons of Essential Health Benefits:
|Essential Benefit Pros
||Essential Benefit Cons
| Ensuring that all plans include the essential benefits makes it easier to compare plans. At present few policyholders understand what their policy excludes, until they are sick and are denied benefits!
||There will be less choice in the extent of coverage available.
|Essential Benefits have no lifetime or annual limits, ensuring less medical bankruptcies and no stopping of essential treatments.
||The ban on dollar limits ads to the cost of insurance premiums.
|Essential Benefits are included on all new plans.
||All new plans share the cost of benefits, older plans that don't offer them don't have to share the cost.
Affordable Care Act and Essential Health Benefits
The following sections of the Affordable Care Act relate to Essential Health Benefits. You can find our Summary of Provisions of the Patient Protection and Affordable Care Act here or read the full Patient Protection and Affordable Care Act here.
Sec. 1302. Essential health benefits requirements. Defines an essential health benefits package that covers essential health benefits, limits cost-sharing, and has a specified actuarial value (pays for a specified percentage of costs)...
Sec. 2711. No lifetime or annual limits. Prohibits all plans from establishing lifetime or unreasonable annual limits on the dollar value of benefits.
Sec. 2713. Coverage of preventive health services. Requires all plans to cover preventive services and immunizations recommended by the U.S. Preventive Services Task Force and the CDC, and certain child preventive services recommended by the Health Resources and Services Administration, without any cost-sharing.
Sec. 2707. Comprehensive health insurance coverage. Requires health insurance issuers in the small group and individual markets to include coverage which incorporates defined essential benefits, provides a specified actuarial value, and requires all health plans to comply with limitations on allowable cost-sharing.
You can read the additional official rules and regulations on Essential Benefits and the ACA here.
Government FAQs, Rules and Regulations made under or referred to by the Affordable Care Act:
Department of Labor - Survey of Typical Employer Group Essential Health Benefits required by ACA.
Preventative services that must be provided without any patient cost:
See also CMS FAQ on ACA implementation: Coverage of Preventative Services.
and for much more detail Final Regulations for Coverage of Certain Preventive Services Under the Affordable Care Act.
Unofficial Resources on Essential Health Benefits: http://www.forbes.com/sites/investopedia/2013/10/11/essential-health-benefits-under-the-affordable-care-act/ - https://www.healthcare.gov/blog/10-health-care-benefits-covered-in-the-health-insurance-marketplace/ - http://lpfch-cshcn.org/publications/issue-briefs/habilitative-services-coverage-for-children-under-the-essential-health-benefit-provisions-of-the-affordable-care-act/
Essential Benefits Summary
In summary if you enroll in a plan in the individual or small group market, including all marketplace plans, Medicare, and Medicaid in 2014 or after you'll have access to the new Essential Benefits with no annual or lifetime limits and some will be at no out-of-pocket cost.