- Before the ACA was implemented, very few individual market plans covered all of the essential health benefits.
- The ACA requires all individual and small-group plans effective in 2014 or later to cover ten essential benefits with no dollar limit on the annual or lifetime benefits.
- Details about the coverage are determined by a state’s benchmark plan, and states have flexibility in setting/creating the benchmark plan.
- Variations in the benchmark plan result in differing levels of coverage for various EHBs from one state to another.
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 health insurance 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 medical insurance landscape.
In 2013, only 2% of individual major medical health insurance 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% of individual plans did not include coverage for maternity services.
- 46% did not cover substance abuse services.
- 39% did not cover mental health treatment.
- 18% 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% did not include rehabilitation and habilitation coverage.
But under the health care reform legislation that President Obama signed in 2010, all individual and small group major medical 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 to treat 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
- Preventive services, following guidelines laid out by the U.S. Preventive Services Task Force, the Health Resources and Services Administration, and the CDC’s immunization recommendations. This amounts to a fairly extensive list of services, including things like contraception, blood pressure screening, breast cancer screening, colorectal cancer screening, obesity screening and counseling, tobacco use counseling and interventions, and breastfeeding counseling. It also includes recommended vaccines, including COVID vaccines. But not all preventive services are covered, so it’s important to understand how this works before scheduling a checkup. And some services — such as mammography and colonoscopy — are fully paid for by insurance if they’re done as preventive care in an asymptomatic person, but will require normal cost-sharing if they’re done for diagnostic reasons, such as investigating a lump that you or your doctor found.
- 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. But how many people does that include?
- Roughly 11.3 million people had on-exchange individual market coverage as of early 2021, and that number has increased during the COVID-related special enrollment period.
- In addition, there were an estimated 2.1 million people with ACA-compliant off-exchange coverage in 2019 (off-exchange enrollment isn’t tracked the way on-exchange enrollment is, although we know that it has declined fairly significantly since the plans first debuted in 2014; California’s marketplace estimated that nationwide off-exchange enrollment stood at about 1.5 million people in 2021).
- All non-grandfathered, non-grandmothered small group health insurance plans also include coverage for essential health benefits.
- Medicaid also covers the essential health benefits, and total enrollment in Medicaid/CHIP has grown by more than 24 million people since 2013, due in large part to Medicaid expansion under the ACA and the ongoing COVID pandemic.
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.
Starting with the 2020 plan year, HHS granted states more flexibility in setting the benchmark plan (this rule change was allowed as part of the 2019 Benefit and Payment Parameters), giving states the option to use one of the above methods, or:
- 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.”
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 2019, the benchmark plans were re-established, and plans that were sold in 2014 were used (this list shows which plan each state used). For the 2020 plan year, Illinois made modifications to its benchmark plan, and for the 2021 plan year, South Dakota made modifications to its benchmark plan. For the 2022 plan year, Michigan, New Mexico, and Oregon have made changes to their benchmark plans.
States that opt not to exercise the new flexibility can continue to use the same EHB-benchmark plan that they used for 2017-2019. Current benchmark plan details for each state are available here.
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.
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, as well as state-specific benefits mandates that a state has implemented via the legislative process (for example, requiring all state-regulated health plans to cover male contraception, which goes beyond what the federal government requires in terms of contraceptive coverage).
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.