Essential Benefits

Starting on January 1, 2014, all health insurance policies will be required to cover a broad range of mandated benefits, many of which are not included in some policies today.  As a result, millions of people will be forced to purchase health insurance that is more comprehensive – and more expensive – than they currently have. The CBO found that premiums would increase because policies “would cover a substantially larger share of enrollees’ costs for health care (on average) and a slightly wider range of benefits.”   

Ten Categories of Coverage: The ACA outlines 10 general categories of benefits that have to be included in any policies offered in the “exchange” as well as plans sold in states’ small-group and individual markets: 

Minimum Actuarial Value: The exchanges establish different tiers of coverage based on the “actuarial value” of a health insurance policy. Actuarial value is a summary measure of a health insurance plan’s benefit levels—measuring the relative percentage paid by a health benefits plan and its enrollees for a standard/average population.  For example, a plan with an actuarial value of 70% means that the insurance plan would pay 70% of covered health care expenses—while the enrollee would pay 30% out-of-pocket in the form of co-payments, co-insurance, and deductibles. The most affordable tier, known as the “bronze” tier, will require a minimum actuarial value of 60 percent – which likely represents a higher actuarial value that many plans purchased today in the individual market which, in turn, would result in higher premiums for those plans. 

New Benefit Mandates: The ACA also imposes other benefit mandates, some of which have already gone into effect, such as first-dollar coverage for preventive care, no annual limits on coverage, and no lifetime limits on coverage.  The ACA also establishes limits on deductibles for health insurance plans in the small group market at $2,000 for individuals and $4,000 for families—effective January 1, 2014.  In order to meet these new limits, many small group plans—particularly high-deductible/HSA plans—would have to lower deductibles substantially, thereby increasing the cost of coverage.