Beginning in 2014, the Affordable Care Act will require all non-grandfathered individual and small business health insurance plans inside and outside of the exchanges(CoveredCA) to cover a uniform set of products and services known as Essential Health Benefits (EHB).
This provision is designed to provide a standard level of coverage to anyone who has an individual or small business health insurance plan in California, or anywhere in the country and make it easier for individuals and businesses that offer employee benefits to evaluate their health insurance options.
Grandfathered plans are not required to cover essential health benefits. This may allow the grandfathered plans to maintain lower premiums.
What is Covered?
When the individual mandate in the health care reform act takes effect in 2014, the essential health benefits package will be part of all non-grandfathered individual and small business health insurance plans, and it will include products and services in the following categories:
- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health and substance abuse services
- Prescription drugs. (Must cover one drug in each USP category and/or class.)
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services (including oral and vision care)
Click-Here for a complete list of services that will be covered under California law.
Each state is responsible for determining what products and services within these categories must be covered.
What Isn’t Covered?
The following services are excluded from the essential health benefits package:
- Routine non-pediatric dental services
- Routine non-pediatric eye exams
- Long-term/custodial nursing home care benefits
- Non-medically necessary orthodontia
Maximum Allowable Coverage
Historically, health insurance companies have capped the amount they will pay for covered services at a specific dollar amount. However, under the EHB mandate, there will no longer be annual or lifetime maximums for the cost of essential health benefits in non-grandfathered plans. In addition, all plans must cover at least 60 percent of the costs associated with products and services included in the EHB package.
Impact of Essential Health Benefits
What does this mean for individuals and small businesses that offer employee benefits? To reduce premiums, many individual and small business plans do not currently cover all of the services included in the essential health benefits package. Insurance companies previously offered plans without all of the Essential Health Benefit services for reduced premiums by excluding coverage that is considered unnecessary by the individual. For example, in the past a 60-year-old woman could have chosen to forego Maternity and Newborn coverage because it would be unlikely she would need it. However, this practice cannot continue because all members will be required to have coverage for all essential health benefits, including maternity and newborn coverage. Men also are now required to have Maternity and Newborn coverage. It is widely believed that the cost of health insurance premiums will increase when carriers add these services to their plans beginning in 2014.
Californians will be required to purchase one of the new health reform benefit plans , unless exempted. The essential health benefits package is expected to increase the financial burden on tens of thousands of individuals in California and millions across the country . Small businesses that offer employee benefits will also feel the effects of this provision as they share the cost of the increased premiums with their employees.
To help offset the cost of increased healthcare premiums, the government will offer subsidies to eligible individuals and small businesses. Individuals who qualify can use our health insurance subsidy calculator to determine how much assistance they can expect.
