Understanding Essential Health Benefits Under the ACA

The Affordable Care Act (ACA), also known as Obamacare, is a comprehensive healthcare reform law enacted in 2010. Its primary goal is to make healthcare coverage more accessible, affordable, and of higher quality for individuals and businesses. The ACA has significantly impacted employee benefits plans, particularly for employers offering group health insurance.

With recent changes in health care law under the Affordable Care Act, a number of “essential benefits” are now required to be covered by insurance companies. The essential benefits requirement does not apply to grandfathered health plans, but it does apply widely to most plans that now must provide services across a group of health categories. The 10 categories of essential health benefits, along with a description of each, are listed below.

1. Ambulatory services – Ambulatory services are more commonly referred to as outpatient care, or services that do not require an overnight stay. Most insurance plans already offer ambulatory care since it is one of the more common health services needed.
2. Emergency services – Like ambulatory care, most insurance plans also provided some kind of emergency benefit prior to the implementation of the Affordable Care Act. With the changes brought on by the new health care reform laws, emergency room visits not only must be covered, but you cannot be charged more for going to an out-of-network medical provider for emergency treatment.

 

3. Hospitalization – The new health care laws also mean that insurance companies have to cover your hospital stay, though you may still be responsible for a portion of the payment if your plan indicates you need to meet a deductible. This is an especially important provision since the costs of staying in a hospital, even for a few days, can run in the tens of thousands of dollars.
4. Maternity & newborn – Prenatal care is a service that must be offered at no extra charge under the Affordable Care Act. Additionally, childbirth and newborn care also coverage requirements, which is a welcome change to many insured parents who have seen these type of benefits excluded from their health plans in the past.

6. Mental health (including substance abuse) – Mental health services that must be offered include both inpatient and outpatient care, as well as diagnosis and treatment. Treatment for addiction and behavioral health fall also under this category.
7. Prescription drug benefit – Traditionally, prescription drug coverage has often been an option from insurance carriers that came with an additional cost and, in the eyes of patients, too many coverage gaps. Under the new law, insured individuals and groups must be offered prescription coverage that covers at least one option in each drug class. What this means is that if a doctor prescribes something that’s not covered, there will be another option in the same drug class that is covered.
8. Rehabilitative & habilitative – Recovering and developing skills that are affected as a result of medical issues are also considered an essential benefit. This applies to skills lost as a result of injury, chronic condition (including devices needed for rehabilitation). Medical services that fall under this section of essential benefits include physical therapy, occupational therapy and visits to a chiropractor.
9. Preventive, wellness & disease management – Preventive care covers a wide range of services, including physicals, health screenings and immunizations. Treatment for chronic conditions are also covered under this section of essential benefits.
10. Lab tests – Preventive tests and screening are covered under the new health care law (see #8), but so too are some lab tests and diagnostic procedures like an MRI. Unlike preventive care, some lab tests may still require a significant out of pocket cost depending on the service and type of coverage plan.
11.  Pediatric services – Pediatric services include medical care for infants and children and cover immunizations and vaccination. For children under the age of 19, dental and vision care must be included as part of the coverage, including yearly visits to a dentist and optometrist.

Key Provisions of the ACA

The ACA introduced several critical regulations that affect both employers and employees:

1. Employer Mandate

• Employers with 50 or more full-time employees must offer affordable health insurance that meets minimum essential coverage (MEC) standards.

• Failure to comply can result in penalties under the Employer Shared Responsibility Payment (ESRP).

2. Essential Health Benefits (EHBs)

• ACA-compliant plans must include a set of essential health benefits, such as:

  • Preventive care

  • Prescription drugs

  • Maternity and newborn care

  • Mental health services

  • Emergency services

3. Pre-Existing Conditions Coverage

• The ACA prohibits insurers from denying coverage or charging higher premiums based on pre-existing conditions.

4. Health Insurance Marketplaces

• The ACA established state and federal marketplaces where individuals and small businesses can shop for coverage.

• Employees of small businesses can access coverage through the Small Business Health Options Program (SHOP).

5. Subsidies and Tax Credits

• The ACA provides premium tax credits and subsidies to eligible individuals and small businesses to reduce healthcare costs.

• Employers with fewer than 25 employees may qualify for the Small Business Health Care Tax Credit if they provide ACA-compliant coverage.

  
  

The ACA’s Impact on Employee Benefits Plans

The ACA has transformed the way employers design and manage employee benefits. Here’s how it affects businesses and their workers:

For Employers:

✅ Compliance Requirements: Employers must ensure their plans meet ACA standards to avoid penalties.
✅ Cost Considerations: Many businesses adjust their offerings to balance costs with compliance.
✅ Plan Offerings: Employers may choose between traditional group plans and marketplace-based solutions like Individual Coverage Health Reimbursement Arrangements (ICHRAs).

For Employees:

✅ Expanded Coverage: Employees now have access to affordable, comprehensive plans with essential benefits.
✅ Prevention and Wellness: Preventive services like vaccines and screenings are covered without out-of-pocket costs.
✅ More Options: Employees can explore plans through the ACA marketplace if employer-sponsored coverage isn’t available.

ACA Compliance Strategies for Employers

To stay compliant with the ACA while optimizing employee benefits, businesses should consider:

📌 Offering Competitive Plans: Ensure that health plans meet minimum essential coverage and affordability standards.
📌 Utilizing ICHRAs: Allow employees to purchase individual ACA plans using employer-provided funds.
📌 Leveraging the SHOP Marketplace: Small businesses can provide ACA-compliant coverage through the Small Business Health Options Program (SHOP).
📌 Staying Updated on Regulations: ACA requirements evolve, so regular compliance checks are essential.

Get Started With Us Now

The Affordable Care Act has reshaped employee benefits, emphasizing accessibility, affordability, and quality. Taylor Benefits Insurance helps businesses navigate ACA requirements, ensuring they offer compliant, cost-effective, and competitive health benefits for their workforce.

For expert guidance on ACA-compliant employee benefits plans, contact Taylor Benefits Insurance today.

Resources For Essential Benefits Under the PPACA

PPACA & Essential Health Benefits (PDF) – The text from the section of the Patient Protection and Affordable Care Act that specifies the requirements of providing essential health benefits.

The Individual Shared Responsibility Provision – Questions and answers from Irs.gov about the requirements of the individual shared responsibility provision of the PPACA, including what qualifies as minimum essential health coverage.