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ACA Consumer Protections

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The Affordable Care Act (ACA) created many new rights and protections for health insurance enrollees.  This article describes many of those protections, with details on exactly which health plans are affected by each new protection.

Some Distinctions & Definitions

Many of the ACA’s consumer protections apply only to certain types of health insurance coverage, while not applying to other types of coverage.  This section describes some different types of health plans.  The differences between these types of plans will become apparent as each consumer protection is described.

Fully-insured vs. Self-Insured

Health plans offered by employers may be fully-insured or self-insured.

Under a fully-insured plan, the employer pays monthly premiums to an insurance company, then the insurance company pays the bills when an enrollee uses medical services.  Fully-insured plans are most common in smaller employers (smaller than, say, 50 or 100 employees), and more common in employers with employees in only one or two states.

Under a self-insured plan, the employer pays the bills when an enrollee uses medical services.  Under self-insured plans, though, an insurance company is used to administer the plan.  This means that enrollees of self-insured plans will carry an insurance card with the name of an insurance company (e.g. BlueCross, United, etc.).  Self-insured plans are more common in larger employers (larger than, say, 50 or 100 employees), and more common in employers with employees in many states.

Because insurance companies administer the benefits in both types of plan, it can sometimes be difficult to determine if someone’s plan is self-insured or fully-insured.  It may be necessary to examine the plan documents, or to ask at the employer’s human resources office.

The biggest difference is that self-insured plans are exempt from state law.  Some federal protection from the ACA also do not apply to self-insured plans.

Individual Market (Non-Group) vs. Small Group vs. Large Group

The “individual market” (sometimes called “non-group market”) is insurance that is sold directly to individuals or families.  In Rhode Island, individual market insurance can be purchased through HealthSource RI (HSRI), or can be purchased directly from BlueCross BlueShield without going through HSRI.

The “small group market” is insurance sold to employers with fewer than 50 employees.  Sometime in 2016, it is expected that this definition will change and insurance sold to employers with fewer than 100 employees will be considered “small group.”  (There is some possibility, however, that this change will not take effect.)

The “large group market” is insurance sold to employers with more than 50 employees.  If the definition of small group changes to go up to 100 employees (see above), then only employers will more than 100 employees will be considered large group.

Grandfathered vs. Non-Grandfathered

“Grandfathered” plans are plans that existed as of March 23, 2010 and have not changed substantially since then.  Grandfathered plans are now relatively rare.  Some of the ACA’s rules do not apply to grandfathered plans.

More information on grandfathered plans, including a list of the ACA protections that apply and those that don’t, can be found here.

Essential Health Benefits

Essential Health Benefits rules apply to all fully-insured plan sold in the individual and small group markets.  The rules do not apply to self-insured plans, or to large group plans.

All such plans will cover almost the exact same set of healthcare services, because they are required by law to coverage “essential health benefits” (EHB).  Under federal law, the EHB package covered by each plan must include coverage of:

  • Outpatient care;
  • Emergency services;
  • Hospital inpatient care;
  • Maternity and prenatal care;
  • Mental health and substance abuse disorder services, including behavioral health treatment, counseling, and psychotherapy;
  • Prescription drugs;
  • Rehabilitative and habilitative services, including physical and occupational therapy, speech-language therapy, psychiatric rehabilitation, and more;
  • Labs;
  • Preventive services; and
  • Pediatric services, including dental and vision care for kids.

More information on federal EHB rules can be found here.

The State of Rhode Island also provides more detail to the EHB standards by naming an “EHB Benchmark Plan” for the State.  All QHPs in Rhode Island must cover the same services (or nearly the same services) as the EHB Benchmark Plan.

For 2017, the EHB Benchmark Plan in Rhode Island is BCBS VantageBlue.  This means that all QHPs must cover the same services as BCBS VantageBlue.  This does NOT mean that copays, deductibles, and other cost sharing must be the same as the VantageBlue plan.

A certificate of coverage for the EHB Benchmark Plan (BCBS VantageBlue) is available here –EHB-Benchmark-2017-VantageBlue.

Example 1
BCBS VantageBlue gold plan covers organ transplants.  There is no copay, but the enrollee must first meet her deductible before coverage applies.
→ Every QHP must also cover organ transplants, because this is a service covered in the benchmark plan.  But some QHPs may apply copays or other cost sharing to organ transplants.

No Cost Preventive Care

The no-cost preventive care rules apply to all non-grandfathered health plans, including self-insured plans.  The rules do not apply to grandfathered plans.

The rules require that all non-grandfathered plans provide full coverage for preventive care, with no out of pocket costs for the enrollee.

This means that enrollees can all get an annual checkup, for example, without paying any money out of pocket.  Plans cannot require enrollees to pay copays or meet deductibles before covering preventive services.

The list of preventive services that must be covered in this way is based on recommendations of the U.S. Preventive Services Task Force and other experts.

More information on which preventive services most be covered with no out of pocket costs is available here:

Healthcare.gov has some basic information on these rules posted here.

No Annual or Lifetime Limits

The rule prohibiting lifetime coverage limits applies to all health plans, including self-insured and fully-insured, and including grandfathered plans.  The rule prohibiting annual coverage limits applies to all plans other than grandfathered individual market plans, which are extremely rare.

These rules prohibit a health plan from applying dollar limits to coverage provided for essential health benefits.  Two different types of limits are still allowed: (1) limits on the number of visits, not on the dollar value of coverage (like a limit for 20 physical therapy visits in a year); and (2) dollar value limits on benefits that are not essential health benefits.

Covering Children Up to Age 26

The rule requiring health plans to cover children up to age 26 applies to all health plans that offer coverage of dependents.

The rule requires that health plans that offer dependent coverage allow enrollees to maintain coverage for their children until the child’s 26th birthday.  (The rule does not require plans to cover dependents in the first place.  But all plans that offer dependent coverage must follow the age 26 rule.)

Children under 26 can join, rejoin, or remain on their parents plans.  Plans cannot have different rules for children who are married, are not students, live independently, or have access to plan through their own jobs.  All kids up to 26 are eligible, period.

Healthcare.gov has information posted here.

Many health plans also have rules allowing disabled adult children to stay on a parent’s plan, even after age 26.  These rules are not required under federal law, and may vary a little between different health plans.

No Pre-Existing Condition Exclusions

These rules apply to all health plans other than grandfathered plans in the individual market, which are extremely rare.

The rules prohibit health plans from refusing to provide coverage to someone with a pre-existing health condition.  The rules also prohibit health plans from refusing to provide benefits specifically related to a pre-existing condition.

Mental Health Parity

Mental health parity rules apply to all health plans that offer mental health benefits, including self- and fully-insured plans, and including grandfathered plans.  Plans to which the EHB rules apply (fully-insured plans in the individual and small groups markets) must cover mental health benefits, so the parity rules apply to all of these plans.  Some health plans (especially self-insured plans) are not required to offer mental health benefits, and the parity rules do not require them to do so.  But if they do offer a mental health benefit, then the parity rules will apply.

For all plans offering mental health benefits, the parity rules require that the mental health benefits be “at par” with (meaning “as good as”) the medical/surgical benefits offered under the plans.

Some applications of this rule are easy.  A plan cannot have higher co-pays or higher deductibles for mental health coverage.  A plan also cannot have limitations (like number of visits per year) that more restrictive in the mental health context than are the limitations for comparable medical/surgical benefits.

Other applications of this rule are more complex.  For example, the rules also prohibit health plans from using more stringent medical necessity requirements for mental health benefits.  But it can be very difficult to identify when this type of conduct is occurring.

A great deal of additional information on mental health parity is available here.

Out-Of-Network Emergency Care

The rules regarding coverage for out-of-network emergency care apply to all non-grandfathered plans, including self-insured plans.  The rules do not apply to grandfathered plans.

The rules prohibit non-grandfathered health plans from charging higher copays for out-of-network emergency care, or from requiring prior authorization to receive out-of-network emergency care.

The ruled do not require health plans to pay the full charge of the out-of-network emergency facility.  Plans are only required to pay the greatest of:

  1. The amount it typically pays to in-network providers for the same services;
  2. The amount it typically pays for out-of-network benefits (e.g. 80% of usual and customary); and
  3. The amount that would be paid by Medicare for the same services.

The patient may be responsible to pay the difference between this amount and the amount billed by the provider.

Some healthcare.gov information on these rules can be found here.

Appeal Rights

The federal rules governing appeal rights apply to all non-grandfathered plans.  There are also similar state rules that apply to all fully-insured plans (even if grandfathered).  So self-insured grandfathered plans are the only plans where there may be no legally binding rules governing appeals.

The appeals rules require that all plans allow enrollees to appeal when they disagree with a coverage decision made by their health plans.  The rules vary slightly between self-insured and fully-insured plans, but there are common themes:

  • Health plans must provide written notice (called an “adverse benefit determination”) when they refuse to pay in full for any service;
  • The adverse benefit determination must include an explanation of the denial, and provide information on how to appeal;
  • The initial two rounds of appeal are “internal appeals,” meaning that other health plan employees will be reviewing the denial to make sure that the plan is following all of its own rules;
  • After internal appeals, many decisions can be appealed to “external review.”  On external review, a neutral medical expert (who is not an employee of the health plan) will review the plan’s denial.  The external reviewer will also be influenced by general best medical practices, and is not bound to adhere to all of the health plans coverage rules.

A great deal of information and guidance on the federal rules that apply to self-insured plans can be found here.

The State regulation that applies to fully-insured plans can be found here.

More Resources:

Author: Sam Salganik
Date: September 15, 2015

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