Essential Health Benefits (EHBs) are a set of health care services that plans in the ACA Marketplace and the Medicaid program are required to cover.
The required Essential Health Benefits include:
- Ambulatory patient services (outpatient care patients can receive without being admitted to a hospital)
- Emergency services
- Hospitalization (including surgery and overnight stays)
- Pregnancy, maternity, and newborn care (both before and after birth)
- Mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
- Prescription drugs
- Rehabilitative and habilitative care (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services (Under EHB requirements, health care coverage for children must including oral and vision care)
The ACA’s EHB requirements sought to ensure that individual and small group market health insurance plans were more robust and similar to employer-sponsored coverage. Prior to the enactment of the ACA, people shopping for coverage on the individual or small group markets were often not able to find comprehensive plans that affordably covered the health care services they needed, especially if they had a pre-existing condition. Pre-ACA, 20 percent of people enrolled in the individual market had no prescription drug coverage, compared with just 5 percent in the employer market who went without.
Prior to ACA, insurers in most states had a great deal of the flexibility in plan design. Insurers designed plans to appeal to healthy people and excluded coverage for critical services. Individuals with illness, injury, or chronic conditions were often left to bear nearly the full financial risk under policies that purported to provide full coverage, but in reality, offered much less. Insurance plans in the individual and small group markets often covered very little, despite expectations of the buyers. The EHB requirements help to ensure that basic health care services are included in all health plans.
Tied to the EHB requirements in the ACA are also requirements around annual and lifetime limits and caps on beneficiaries out-of-pocket spending. These requirements impact all health plans, not just those in the individual and small group market. Employer-sponsored plans, which around 50 percent of Americans have, are not required to cover EHBs, but most do offer these benefits and even more. Under the ACA, if a health insurance plan covers one or some of the EHBs, then it cannot impose annual or lifetime limits on those particular benefits and there must be a cap on what beneficiaries can be required to pay out-of-pocket cap for these benefits. In practice, this means that for nearly all Americans, there are no annual or lifetime limits included in their insurance plans. Insurers now cannot stop paying for the benefits when individuals reach a certain amount of health care spending. In addition, there are caps on how much insurers can require a person to pay out-of-pocket (the “out-of-pocket maximum”). Once a person reaches the out-of-pocket maximum, insurers must cover all further costs incurred. These are significant consumer protections.
Prior to ACA, insurers were able to design plans in which they would stop covering services once a dollar amount was reached and require unlimited out-of-pocket costs in the form of deductibles, copayments and coinsurance. These costs were particularly concerning for those with serious chronic conditions and expensive medical needs, who would reach the annual and lifetime limits and face unlimited out-of-pocket costs.