NovemberReport - page 8

November 2013 CBA REPORT
feature article
here has been much confusion
over PPACA’s use of the word “es-
sential” — and with good reason.
PPACA requires employer plans to pro-
vide essential coverage in order to avoid
a tax penalty, but it does not require em-
ployer plans to provide essential benefits.
This article examines the different uses
of the word “essential” in two significant
terms: minimum essential coverage and
essential health benefits.
Why is Minimum Essential
Coverage Important?
Minimum essential coverage is
important to individuals because
individuals must enroll in minimum
essential coverage beginning in 2014 in
order to avoid a tax penalty.
Minimum essential coverage is
important to employers for two reasons.
First, employers must offer minimum
essential coverage beginning in 2015 to
avoid the employer pay-or-play penalty.
Second, an individual will not be eligible
for a Marketplace tax credit if he or she is
eligible for minimum essential coverage
(other than individual coverage). Because
the pay-or-play penalty may be based on
the number of employees who are eligible
for a Marketplace tax credit, employ-
ers budgeting for the penalty will want
to understand the circumstances under
which individuals may be eligible for
minimum essential coverage.
What is Minimum Essential
Minimum essential coverage includes
certain governmental programs (such
Ed. Note: This is the ninth in a series of articles that will be published in the CBA Report over the next several
months related to the 2014 implementation of the Patient Protection and Affordable Care Act (“PPACA”). This in-
formation was submitted for publication on October 2, 2013. It does not reflect guidance issued on or after this date.
By Kimberly Wilcoxon
as Medicare, Medicaid, the Children’s
Health Insurance Program and TRI-
CARE), individual insurance policies
offered through a Marketplace, most
employer-provided group health cover-
age, and certain other types of coverage.
Which Employer Plans are Not
Minimum Essential Coverage?
Minimum essential coverage does not
include certain limited coverages, such as
coverage only for a specific disease (such
as a cancer policy) or coverage only for
dental or vision care services.
What Benefits Must be Covered?
Based on current guidance, it appears
that there are no specific benefits that
must be provided under minimum essen-
tial coverage. So long as an employer plan
is not one of the limited plans that are
specifically excluded, it will be consid-
ered minimum essential coverage.
For example, an employer might
offer a self-insured plan that covered
only the preventive care services that
are required of non-grandfathered plans
under PPACA. Based on current guid-
ance, it appears that such a plan would be
considered minimum essential coverage
— even though it did not provide cover-
age for emergency care, hospital visits,
rehabilitative services, or any other care
that an individual might need in order to
respond to an accident or illness.
Why are Essential Health Benefits
Essential health benefits are impor-
tant to individuals because Marketplace
policies are required to provide coverage
for all essential health benefits. Individu-
als who enroll in a Marketplace policy
can therefore feel confident that the poli-
cy will cover a broad range of benefits.
Essential health benefits are impor-
tant to employers for two reasons. First,
although group health plans are not re-
quired to cover essential health benefits,
they are subject to certain rules with re-
spect to any essential health benefits they
choose to offer. For example, a group
health plan may not impose an annual or
lifetime dollar limit on essential health
Second, insurance policies offered in
the small group market are required to
provide coverage for all essential health
benefits beginning in 2014. A small em-
ployer will need to know that it no longer
has an option to offer an insured plan
with more limited benefits.
What are Essential Health
Each state is permitted to create
its own definition of essential health
benefits. However, the state must define
essential health benefits so as to include
at least the ten categories of benefits that
are listed in PPACA. Those categories in-
clude emergency services, maternity and
newborn care, mental health services,
prescription drugs, and pediatric dental
and vision care, among others.
Which State Definition must an
Employer Plan Use?
Guidance has not yet been issued to
confirm which benefits will be con-
Why it is Essential to Understand PPACA’s Definitions of
1,2,3,4,5,6,7 9,10,11,12,13,14,15,16,17,18,...40
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