ACA’s Essential Health Benefits, Minimum Essential Coverage, & Minimum Value

Given the enormous complexity of the Affordable Care Act (ACA), it’s understandable that there’s confusion about the terms used to describe 3 key provisions scheduled to take effect in 2014. They are: Essential Health Benefits (EHB)Minimum Essential Coverage (MEC), and Minimum Value (MV).  Each of these provisions has an important impact on employers, employees, and individuals. This week’s post defines these terms and describes their impact in 2014 and beyond.

Essential Health Benefits
Starting in 2014, all non-grandfathered, fully insured individual and small-group health plans (covering up to 50 people) offered on and off the public health insurance Marketplaces/Exchanges must cover what the ACA classifies as Essential Health Benefits, which consist the following health benefit categories:
  1. Ambulatory patient services – doctor visits when you’re sick or injured, or outpatient clinic visits
  2. Emergency services – visits to the emergency room including ambulance services or treatment at an urgent care center
  3. Hospitalization – a hospital stay, including inpatient surgery
  4. Maternity and newborn care – for women who need prenatal care or help with pregnancy, complications, delivery, etc.
  5. Mental health and substance use disorder services, including behavioral health treatment – visits with a doctor or other health care professional, etc.
  6. Prescription drugs 
  7. Rehabilitative and habilitative services and devices – physical therapy, speech therapy, artificial limbs and other medical equipment
  8. Laboratory services – X-Rays, MRIs, blood tests, etc.
  9. Preventive and wellness services and chronic disease management – screening tests for things like osteoporosis and mammograms, and assistance with chronic illnesses
  10. Pediatric services, including oral and vision care – dentist check-ups, routine eye doctor visits, eyeglasses, and immunizations.
NOTE: The underlined services are items that have not historically been covered by many small group and individual health insurance plans.  Also, partially self funded plans are NOT required to include the 10 essential health benefits.
Only non-grandfathered, insured individual and small-group plans (50 or fewer employees) sold on and off the health insurance Marketplace are required to cover Essential Health Benefits. But any plan that includes any Essential Health Benefits – grandfathered or not, regardless of size, and whether fully insured or self funded, may not apply annual or lifetime dollar limits.  Beginning in 2016, the small employer definition will expand from under 50 employees to 1-100 employees.
Minimum Essential Coverage (MEC)
The ACA’s “individual mandate” takes effect on January 1, 2014.  According to the mandate, most Americans will be required to maintain Minimum Essential Coverage or be subject to a tax penalty.  (see  ACA Misconception no. 2 to see who is exempted – )  

Minimum Essential Coverage is defined by the source of coverage, as follows: 
    • an employer-sponsored plan,
    • a government-sponsored program, such as Medicare or Medicaid,
    • a grandfathered health plan,
    • an individual plan purchased on or off the public Marketplace, or
    • coverage offered through state health benefit risk pools and approved by the Department of Health and Human Services (HHS).

      Note: a previous blog post clarified that certain large employers who are facing significant employer shared responsibility fine exposure can avoid the more onerous of the penalties by offering a basic (and extremely inexpensive) MEC plan.  (See – )

Minimum Value
Minimum Value refers to requirements outlined in the ACA’s “employer mandate” provision, delayed until 2015. The employer mandate will require employers with 50 or more full-time employees (including full-time equivalents) to offer full-time workers and their dependent children up to age 26 coverage that’s both affordable and provides Minimum Value, or face penalty exposure. 
To meet the Minimum Value requirement, a plan must cover at least 60 percent of total allowed costs (i.e., what the plan pays versus what the customers pays in deductibles, copays and coinsurance). In addition to providing Minimum Value, the plan must also be considered “affordable”.  A plan is considered affordable if the amount of premium an employee is required to contribute is less than 9.5 percent of the employee’s W-2 wages.