Health care reform has coined several new terms that are confusing, and often used interchangeably – minimum essential coverage, qualified health plans, and essential benefits and essential health benefits package, among others. This post is designed to assist self-funded health plan sponsors in determining which terms are relevant to them, and how they are relevant.
Qualified health plan – The term “qualified health plan” is used throughout PPACA. However, it applies only to health plans that will offer coverage in the newly created health insurance exchanges, effective in 2014. Health plans offered through the exchanges must be “qualified health plans.” In general, this means that the plans must offer an essential health benefits package that includes essential health benefits. Self-funded plan sponsors need not offer “qualified health plans.”
Essential health benefits package – This term also relates only to health plan coverage that will be offered in the new health insurance exchanges. In general, an essential health benefits package must provide essential health benefits, must limit cost-sharing, and must provide coverage that meets certain actuarial equivalents. Self-funded health plan sponsors do not need to offer an “essential health benefits package.”
Minimum essential coverage – This term is used to describe the coverage required to fulfill the individual mandate – and the coverage employers will be required to offer to avoid penalties under PPACA. The definition includes any “eligible employer-sponsored plan,” which means that most employer-sponsored group health plans should meet this requirement. Of course, additional requirements must be met to avoid the free rider penalty. The coverage must also be affordable and sufficiently valuable. We are still waiting for guidance on exactly how these requirements will be tested.
Essential health benefits – These are the benefits that insured plans will need to offer, effective 2014. While the statute lists certain broad categories of benefits that are essential (ambulatory patient services, emergency services, hospitalizations, maternity and newborn care, mental health and substance use disorder services, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services, and pediatric services), we are still waiting for additional guidance on exactly what constitutes essential health benefits. Self-funded health insurance plans are generally NOT required to offer essential health benefits – other than first dollar preventive care for non-grandfathered plans. However, most self-funded health insurance plans will offer some benefits that are essential. Any essential health benefits offered must not be subject to lifetime limits, and are subject to restrictions on annual limits.