Prior to 2014, the coverage available in the major medical health insurance market ran the gamut from robust to terrible. While there were plenty of solid plans with comprehensive coverage, there were also policies that were riddled with exclusions, even for things most of us would consider essential, like maternity care, rehabilitation following an injury, or even prescription drugs.
Most large companies with deep pockets were already providing comprehensive coverage for their employees prior to 2014, and federal law has required that they cover pregnancy and childbirth since the late 70s. But policies sold to individuals and small employers were sometimes of poor quality and littered with gaps in coverage in the days before the Affordable Care Act reformed the health insurance landscape.
In 2013, only 2 percent of individual major medical plans were providing coverage for all ten of the essential health benefits that are now standard on all plans purchased since January 1, 2014. In particular:
- 66 percent of individual plans did not include coverage for maternity services.
- 46 percent did not cover substance abuse services.
- 39 percent did not cover mental health treatment.
- 18 percent did not cover prescription drugs (and there was also a trend in the decade prior to the ACA of some individual market insurers switching to generic-only coverage. While that technically counted as “covering” prescription drugs, it wasn’t particularly useful if the person became seriously ill and needed expensive prescription drugs).
- 15 percent did not include rehabilitation and habilitation coverage.
But under the health reform legislation that President Obama signed in 2010, all individual and small group plans effective on or after January 1, 2014 (including plans sold through the exchanges and outside the exchanges) must include coverage for these ten essential health benefits — EHBs — with no annual or lifetime dollar limit:
- ambulatory services (visits to doctors and other healthcare professionals and outpatient hospital care)
- emergency services
- maternity and newborn care
- services for those suffering from mental health disorders and problems with substance abuse
- prescription drugs (including brand-name drugs and specialty drugs; the pre-ACA trend towards generic-only coverage was eliminated by the ACA)
- lab tests
- chronic disease management, “well” services and preventive services recommended by the U.S. Preventive Services Task Force (including blood pressure screening, breast cancer screening, colorectal cancer screening, obesity screening and counseling; tobacco use counseling and interventions, and breastfeeding counseling)
- pediatric services for children, including dental and vision care (there is some flexibility on the inclusion of pediatric dental if the plan is purchased within the exchange)
- rehabilitative and “habilitative” services which include helping a person keep, learn or improve functioning for daily living. (Examples include therapy for a child who isn’t walking or talking at the expected age physical and occupational therapy, help for those experiencing problems with speech, and treatment for individuals suffering from a variety of disabilities.) Although all EHB must be covered without annual or lifetime caps on the dollar amount of the benefits, it’s very common to see plans with caps on the number of visits an enrollee can have for services like physical therapy or occupational therapy.
There are still grandmothered and grandfathered plans in force that do not have to include all of the essential health benefits. But every individual and small-group policy sold since January 1, 2014 includes essential health benefits coverage.
Including both on- and off-exchange plans, more than 15 million people were enrolled in Obamacare-compliant plans in the individual market in 2018. In addition, Medicaid also covers the essential health benefits, and total enrollment in Medicaid/CHIP has grown by more than 16 million people since 2013 (Medicaid expansion took effect in 2014, but the growth in enrollment also includes people who were already eligible for Medicaid but who only signed up after 2013, due in part to the increased outreach and marketing that went along with the ACA’s expansion of Medicaid).
Benchmark plan specifies how EHBs are covered, and states have flexibility in selecting/creating the benchmark plan
Lawmakers tasked with creating the ACA believed that if a patient moves from Portland, Oregon to Portland, Maine, he should be confident that his policy still will include these basic benefits. At the same time, they recognize that both patient expectations and the way doctors practice medicine are different in different parts of the country.
This is why the Department of Health and Human Services (HHS) gave the states the freedom to model their benchmark plan (ie, the plan that serves as a minimum standard on which all new plans are modeled, including the specifics in terms of how essential health benefits are covered) for individuals and businesses on either:
- one of the three small group plans in their state that boast the largest enrollment, or
- one of the three most popular state employee plans, or
- one of the three federal employee health plan options with the largest enrollment in the state, or
- the most popular HMO plan in the state’s commercial market.
Although states have flexibility in determining their benchmark plan, the essential health benefits must be incorporated. For coverage sold in 2014, 2015, and 2016, the benchmark plan was a policy that was sold in 2012. Since the benchmark plans were high-quality, commercial plans, they tended to be much more robust than what was being sold in the individual market in 2012. But if the ten categories of services listed above were not included in the state’s benchmark plan, the state had to expand the package to include them.
For 2017 through 2020, the benchmark plans were re-established, and plans that were sold in 2014 are being used (this list shows which plan each state is using). The ACA’s essential health benefits rules do not apply to the large group market (with the exception of preventive care, which applies across the board), but again, the employer-sponsored plans from which states can pick their benchmark plan tend to be high-quality. But as was the case with the first round of benchmark plans, a state must supplement the benchmark plan to bring it up to scratch if it’s lacking in any of the essential health benefit categories.
Starting with plans sold in 2020, CMS is providing states with additional flexibility in setting their benchmark premiums. For 2020 benchmark plans, states have the option to:
- Use a benchmark plan that was used by another state in 2017.
- Create a new benchmark plan by essentially combining portions of their existing benchmark plan with portions of another state’s benchmark plan, replacing one or more essential health benefit categories with the applicable coverage from another state’s benchmark plan.
- Or, in what amounts to granting states a significant amount of latitude, “Otherwise selecting a set of benefits that would become the State’s EHB-benchmark plan.”
CMS has a list that provides details for each state’s benchmark plans, including the plans for 2017 and the new guidelines that states can use for 2020 and beyond.
Due to benchmark plan variations, EHB coverage specifics vary from state to state
Because minimum coverage requirements for EHBs are specifically defined in each state’s benchmark plan, the details of the coverage vary from one state to another. We can look at physical therapy — which is part of the habilitative/rehabilitative EHB — for a good example of how this works in a couple of states:
New York has designated an Oxford EPO small group plan as its benchmark. That plan includes coverage for up to 60 physical therapy visits per year, but notes that “Speech & physical therapy are only covered following a hospital stay or surgery.” So insurers offering individual and small group coverage in New York are not required to cover physical therapy if the patient has not had a hospital stay. They can choose to go above and beyond that coverage level, but they don’t have to.
Now let’s consider another state. Colorado’s benchmark plan limits physical therapy to just 20 visits per year, but physical therapy is “covered if, in the judgment of a Plan Physician, significant improvement is achievable within a two-month period.” So insurers in Colorado must cover up to 20 physical therapy visits per year, and cannot limit coverage only to those who had a prior hospital stay.
This is just one example of how “covered” doesn’t mean covered in the same way from one state to another. It all depends on the benchmark plan in your state.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
10 Essential Health Benefits Insurance Plans Must Cover
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