Essential Health Benefits Package
The Secretary will specify the “essential health benefits” included in the “essential health benefits package” that Qualified Health Plans (QHPs) will be required to cover (effective beginning in 2014). Plans available on the Member Health Insurance Exchange will meet the minimum requirements of Essential health benefits. Essential health benefits, as defined in Section 1302(b) of the Patient Protection and Affordable Care Act, will include at least the following general categories:
- Ambulatory patient services
- Emergency services
- 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 and chronic disease management
- Pediatric services, including oral and vision care.
Women’s preventive health services were defined in detail via federal regulations published August 1, 2011, requiring broad coverage, without copayments or deductibles of:
- Annual preventive-care medical visits and exams
- Contraceptives (products approved by the FDA) – with exemptions for religious employers and a temporary enforcement safe harbor.
- Blood pressure tests
- Childhood immunizations
- Domestic violence screenings for interpersonal and domestic violence should be provided for all women
- H.I.V. screenings
- Breast feeding counseling and equipment, including breast pumps at no charge.
- Gestational diabetes in pregnant women screening
- DNA tests for HPV as part of cervical cancer screening
2012-2013 Implementation: New health plans are required to include these services without cost sharing for insurance policies with plan years beginning on or after August 1, 2012. The rules governing coverage of preventive services which allow plans to use reasonable medical management to help define the nature of the covered service apply to women’s preventive services. Plans will retain the flexibility to control costs and promote efficient delivery of care by, for example, continuing to charge cost-sharing for branded drugs if a generic version is available and is just as effective and safe for the patient to use. (Note: 2012 health plans based on a January-December calendar year will change coverage effective January 1, 2013.)
Beginning Jan. 1, 2014, coverage provided for the essential health benefits package will provide bronze, silver, gold, or platinum level of coverage (described below). A health plan providing the essential health benefits package will be prohibited from imposing an annual cost-sharing limit that exceeds the thresholds applicable to HSA-qualified HDHPs. Small group health plans providing the essential health benefits package will be prohibited from imposing a deductible greater than $2,000 for self-only coverage, or $4,000 for any other coverage in 2014 (annually adjusted thereafter). Such limits will be applied in a manner that will not affect the actuarial value of any health plan, including a bronze level plan (described below). Consistent with the immediate reforms described above, plans providing the essential health benefits package will be prohibited from applying a deductible to preventive health services.
PPACA will require the Secretary to define and periodically update coverage that provides essential health benefits. The Secretary will ensure that the scope of essential health benefits is equal to the scope of benefits under a typical employer-provided health plan (as certified by the Chief Actuary of the Centers for Medicare and Medicaid Services). A health plan will be allowed to provide benefits in excess of the essential health benefits defined by the Secretary.
However, if a state requires such additional benefits in QHPs, the state must reimburse individuals for the additional costs of those benefits.
Essential Benefits as Applied in 2010-2013.
While the major, nationwide requirements for essential benefits will go into effect January 1, 2014, there are at least two PPACA provisions already in effect which reference use of “essential benefits”.
- The provision which establishes restrictions on the imposition of annual limits on the dollar value of health plans effective September 23, 2010, requiring coverage value of at least $750,000 per year, refers to the “dollar value of essential health benefits (as defined in Section 1302(b) of the Patient Protection and Affordable Care Act)”, including a waiver process that allows certain plans to have a lower total value for a one-year period.
- The provision which establishes Medical Loss Ratios (MLRs), effective January 2011, references essential benefits as part of the calculation of actual medical payments by insurers.
Annual Limits and Exceptions
Under HHS regulations, plans offered between September 2010 and September 2011 may not limit annual coverage of essential benefits such as hospital, physician and pharmacy benefits to less than $750,000. The restricted annual limit will be $1.25 million for plan years starting on or after September 23, 2011, and $2 million for plan years starting between September 23, 2012 and January 1, 2014.
HHS has approved limited, selected waiver exemptions from annual limits for selected states or employer sponsor situations. In February, 2011 it was announced that Florida, Massachusetts, New Jersey, Ohio and Tennessee, received waivers allowing health insurance companies to continue offering less generous annual limits on benefits. In these cases, existing state law already mandates that policies with lower annual limits on coverage be offered. The Center for Consumer Information and Insurance Oversight (CCIIO), explained that because “limited benefit plans, or mini-med plans, are often the only type of insurance offered to some workers,” the one-year waivers allow continuity.
Levels of Coverage
Beginning in 2014, PPACA will generally require QHPs to provide coverage at one of the following federally established benefit levels: bronze, silver, gold, or platinum. This requirement will apply regardless of whether or not the QHP is offered through an exchange (and premiums must be the same for QHPs inside and outside of the exchange). Excluding dental-only plans, health insurance issuers must offer a silver plan and a gold plan in the exchange. Each coverage level will be based on a specified share of the full actuarial value of the essential health benefits (see Figure 1). A health insurance issuer that offers coverage in any of these four levels will be required to offer the same level of coverage in a plan specifically designed for individuals under age 21.
Another plan option permitted under PPACA in 2014 is a catastrophic plan. A catastrophic plan will provide coverage for essential health benefits, but coverage is paid for by the insurer only after the enrollee pays deductibles equal to the amounts specified as out-of-pocket (OOP) limits for HSA-qualified HDHPs. The exact deductible will be determined for the 2014 plan year. As an advance example, the actual OOP limits for 2011 commercial market tax-deductible HSA/HDHP combinations are $5,950 individual / $11,900 family; for 2012 deductible limits are $6,050 individual / $12,100 family. Such deductibles will not apply to at least three primary care visits per plan year. A catastrophic plan will be permitted only in the individual market (1) for young adults (those under age 30 before the plan year begins), and (2) for those persons exempt from the individual mandate because no affordable coverage is available or they have a hardship exemption. By comparison federal HSA/high deductible plan minimum deductibles for 2010-11 were established to require enrollees to pay the first $1,200 of their medical expenses ($2,400 for family coverage) before insurance benefits begin.