Essential Health Benefits & Association Health Plans

The new regulation for association health plans makes it easier for associations to attain “large group health plan” status and avoid the Essential Health Benefit mandates applicable to small group health plans. For association health plans that are small group sized (i.e. 50 or fewer eligible employees in most states), they must provide all 10 categories of Essential Health Benefits. The exact parameters (e.g. the number of drugs per therapeutic category) of these requirements are normally determined by the benchmark plan of the state in which the health plan operates. These benefits must also be delivered according to the actuarial requirements of the Affordable Care Act.

Large group plans, as mentioned earlier, are not constrained by the Essential Health Benefit requirements of the small group health plan market. However, even for large group association health plans, the Essential Health Benefits have an influence. For example, any association health plan benefit that coincides with any of the Essential Health Benefits below cannot impose either annual or lifetime limits on those benefits.

The list of benefits that would come under the prohibition of annual and lifetime caps are:

• Preventive Care – Preventive care comprises disease screenings, immunizations, & medical issue counseling.
• Ambulatory Services – Ambulatory services pertain to medical care that can be received in a healthcare provider’s facility as an outpatient. Visits to either a doctor or a specialist are examples of ambulatory care.
• Hospital Services – Hospitalization involves medical care received as an inpatient within a hospital or similar facility. An example a hospital service is surgery.
• Lab Services – Lab services pertain to diagnostic tests such as blood analysis performed by a medical laboratory.
• Emergency Services – Emergency services include emergency room treatment and other care related to a medical emergency such as paramedic treatment and ambulance transportation.
• Drug Coverage – Drug coverage addresses prescription medication access. Specifically, drug coverage pertains to what drugs are covered, copayments or coinsurance fees, and any access restrictions placed on covered drugs.
• Maternity & Newborn Care – Maternity and newborn care concerns medical services for pregnancy and birth as well as services addressing a newborn infant.
• Mental Health & Substance Use Disorder Care – Mental health care includes psychotherapy, counseling, and related treatment, whether received as an inpatient or outpatient. Substance use disorder care involves treatment such as rehab services.
• Habilitative & Rehabilitative Care – Rehabilitative services pertain to the restoration of a function impaired by injury or illness. Habilitative services pertain to therapy to acquire a function that was previously absent due to disability or other medical cause. Rehabilitative and habilitative coverage includes medical devices.
• Pediatric Care – Pediatric care is medical services for children under age 19 (including dental and vision care).

With respect to preventive care, large group plans to have obligations as well. The Public Health Service (PHS) Act requires group health plans (which includes association health plans) to provide a collection of preventive care services (specified by the government) without cost-sharing on the part of the enrollee. In other words, these preventive care services must be accessible without out-of-pocket costs on the part of the plan enrollee.

Maternity and newborn health benefits also have mandates attached to them. First and foremost, an association health plan is required to provide both maternity care and newborn care. Health plan benefits for associations as small as 15 employees are required to cover pregnancy, childbirth, and related medical care in a manner similar to other medical conditions covered under the association health plan.

Association health plans are not obligated to offer mental health benefits and substance use disorder benefits. If those benefits are offered by a large group association health plan then the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) requires that the benefits have financial requirements and treatment limitations for mental health and substance abuse benefits that are “no more restrictive than those placed on medical and surgical benefits.”