As part of the Affordable Care Act of 2010, health insurers must include the 10 Essential Health Benefits (EHB) in their health insurance plans.
What kind of health insurers must include EHB? All fully funded health insurance plans in the individual and small group markets (whether they are inside or outside of an exchange) must cover EHB starting in 2014.
Many large employers are self-funded. That means they pay all of the healthcare costs for their employees themselves. Smaller companies are usually fully funded. They pay a premium to a health insurer who is responsible for paying for their employees healthcare costs.
By mandating “essential benefits,” every person who buys health insurance across the US, regardless of whether or not the exchange is run by their state or the Federal government on behalf of that state, will have access to the same level of minimum benefits for the same level of insurance. An exchange is simply an electronic marketplace where consumers can compare health plan offerings and pricing in order to purchase health insurance.
There was a lot of talk and debate over what would make the final list of EHB. Late last month, HHS announced the 10 essential health benefits shown below. The only one that was not typically covered by most plans was pediatric dental & vision. Most of the other services were already covered to some extent.
Exemptions and Grandfathering
Some plans, like grandfathered plans and self-funded plans, are exempt from offering these essential health benefits. If they choose to cover any essential health benefit, however, they must do this without any annual or lifetime dollar limits. Large plans (over 100 employees) are not required to cover essential health benefits either.
Coverage Varies by State
The Affordable Care Act is a Federal law, but insurers have to follow state insurance laws as well as federal laws. How a state defines an EHB may vary. For example, that could mean one state may choose to cover prescription drugs at 50% while another will cover up to 75%. All of these types of details are still being determined.
What Does “Coverage” Mean?
Just because you see an item listed above doesn’t mean it will be covered 100%. For example, you see that prescription drugs are covered. You think to yourself, “Great, I can get any prescription I want now and it’ll be covered.” Your plan can still have a formulary and determine which drugs are covered.
The same goes for a doctor. Your plan can still have in-network and out-of-network physicians. Remember, you always pay much less by seeing an in-network physician, or using an in-network provider.
More Information to Come
The Affordable Care Act is complex. As details and clarifications are made, we’ll keep you updated. Check back often for new updates about healthcare reform.