The MLR standard of the Affordable Care Act requires health insurance companies to devote 80% or 85% of the premiums they collect to provide health care services to customers, after subtracting taxes and regulatory fees. If an insurer does not meet the MLR standards, it may pay rebates to its customers. Given the inherently unpredictable nature of health care costs and utilization, it is not surprising that health plans may pay rebates to some customers in certain markets.
Under the Affordable Care Act, all insurers and group health plans must provide members with a Summary of Benefits and Coverage (SBC) effective September 23, 2012.
The SBC is a summary of the benefits and health coverage offered by a particular plan. The summary will provide clear, consistent, easy-to-understand descriptions to help people shop for and compare insurance plans. The SBC will also have Coverage Examples to help explain the benefits offered for specific common health care scenarios like having a baby or managing Type II Diabetes.
The SBC will be consistent across all health insurance plans and will include:
The items in the SBC just represent an overview of coverage; they are not an exhaustive list of what is covered or excluded. The full terms of coverage are located in the insurance policy.
Those shopping for health insurance can request an SBC before they buy, but must also get a copy at the time of application, enrollment, yearly upon re-enrollment and any time they ask for it.
The Affordable Care Act also requires a Uniform Glossary to be made available to consumers. This is a list of commonly used insurance-related terms and medical terms that will help when comparing terms of coverage and medical benefits.
If any changes are made to the terms of coverage, a Notice of Material Modification must be provided no later than 60 days prior to the date the change becomes effective. This notice is only required when the change in coverage is not included in the most recent SBC and when the change is outside a renewal or reissuance of coverage.
A material modification may be:
The Affordable Care Act requires employers with more than 200 full- time employees and who offer health coverage to automatically enroll new full-time employees in one of its health benefit plans, and to continue the enrollment of current employees in a health benefit plan. The rule directs employers to give employees who are automatically enrolled adequate notice and the opportunity to opt-out of the coverage in which they were automatically enrolled.
The enrollment is subject to any lawful waiting periods required under the benefit plan.
Employers aren’t required to comply with the provision until final regulations are issued by the U.S. Department of Labor.
The Affordable Care Act makes health insurance more widely available to dependent children. This provision requires group health plans and insurers that offer health insurance for dependent children to make coverage available for children (married or unmarried) until age 26.
This means that children under age 26 can no longer be denied coverage based on financial dependency, where they live, whether or not they are a student, whether or not they are employed, or whether or not they are eligible for other coverage, or any combination of those factors. This provision also provides consistency, stating that the terms of the plan or coverage provided for dependent children up to age 26 cannot vary based on the age of a child.
At this time, this provision is effective under most policies. However it does not yet fully apply to grandfathered group health plans. Until January 1, 2014, when the Affordable Care Act is expected to be fully in effect, a grandfathered group health plan that offers dependent coverage for children may exclude an adult child under age 26 from coverage if the child is eligible for another employer-sponsored health plan.
Under the Affordable Care Act, children under age 19 cannot be denied coverage because of a medical condition that already exists, often referred to as a pre-existing condition. At this time, this provision applies to individual and family policies that offer child coverage. It does not apply to grandfathered policies.
Beginning January 1, 2014, no one can be denied coverage due to a pre-existing condition or have coverage that excludes benefits for a specific medical condition.
See our timeline for more information.
The Affordable Care Act expands coverage of preventive health services. This provision requires group health plans and health insurers to cover preventive health services without co-pay, coinsurance, deductibles or other cost-sharing when delivered by a network provider.
Types of medical services covered at 100 percent include services that are recommended by doctors and health experts, such as:
Grandfathered plans are not affected by this provision until January 1, 2014. See our timeline for more information.
Our Preventive Services Fact Sheet provides a list of preventive health services covered at 100 percent when using a provider in our network.
Our Women's Preventive Health Services Fact Sheet provides additional information about coverage for preventive care services and contraceptives for women when using a provider in our network. View Contraceptive Information to see a list of contraceptives covered without cost-sharing .
The Affordable Care Act requires group health plans and health insurers to have an internal claims and appeals process to allow consumers to appeal decisions about paying claims, eligibility for coverage, or ending coverage. The appeals process must be explained in notifications of these adverse decisions. In addition, the Affordable Care Act provides for a review process by an independent third party after the internal appeal is over.
This provision is already active. It does not apply to grandfathered plans. See our timeline for more information.
Rescission is the retroactive cancellation of health coverage. Under the Affordable Care Act, group health plans and health insurers cannot cancel coverage except in cases of fraud or intentional misrepresentation of material fact, as prohibited by the terms of the plan or coverage. A group health plan or health insurer must give written notice at least 30 calendar days before coverage may be rescinded.
This provision is already active. See our timeline for more information.
ACA requires certain health plans and policies to provide minimum coverage for services and items across these 10 essential health benefit categories beginning in 2014:
Items and services that must be covered in each of these 10 essential health benefit categories are being defined by the government. For additional information, see the proposed rule released in late November 2012 by the U.S. Department of Health and Human Services (HHS).
The following non-grandfathered plan types must cover EHBs in 2014. This applies whether these plans are sold on government-run health insurance exchanges or outside of these exchanges.
Other types of health plans are not required to cover EHBs in 2014. However, plans that cover essential health benefits cannot set lifetime dollar limits for these benefits. Plans issued or renewed before January 1, 2014, can set restricted annual limits on the dollar value of EHBs for plans/policies. For more information about limits on EHB coverage, see the sections that follow: Annual Dollar Limits and Lifetime Dollar Limits.
Generally, the Affordable Care Act prohibits group health plans and insurers that offer health insurance coverage from imposing annual limits on the dollar value of essential health benefits. This provision is effective for plan/policy years beginning on or after September 23, 2010. Grandfathered individual market policies are exempt from this provision. However, the Affordable Care Act and federal regulations indicate that, for plan/policy years beginning before January 1, 2014, a plan or coverage may establish restricted annual limits on the dollar value of essential health benefits that are not less than the following amounts:
For plan/policy years beginning before January 1, 2014, Health and Human Services (HHS) has also established a program under which the restricted annual limits may be waived for a group health plan or health insurance coverage that has an annual dollar limit below the restricted annual limits if compliance with the restricted annual limits would result in a significant decrease in access to benefits or would significantly increase premiums.
The Affordable Care Act prohibits group health plans and insurers that offer health insurance coverage from imposing lifetime limits on the dollar value of essential health benefits. This provision is effective for plan/policy years beginning on or after September 23, 2010.
The Affordable Care Act established the Early Retiree Reinsurance Program (ERRP) . This temporary program pays back participating employment-based health plans for a part of the cost of health benefits for early retirees not yet eligible for Medicare and their eligible spouses, surviving spouses and dependents. This program will end January 1, 2014 or when funds are used up. Complete information can be found on the HHS ERRP website .
A grandfathered health plan is a group health plan or health insurance coverage that was in effect before March 23, 2010. Some of the requirements of the Affordable Care Act do not apply to grandfathered health plans.
Our Grandfathering Fact Sheet provides more information on those changes and on what is required to maintain grandfathered status.
The Affordable Care Act includes provisions prohibiting insured group health plans from discriminating in favor of highly compensated individuals. In late December 2010, the government issued a notice indicating that these provisions require additional regulatory guidance. Therefore, they have decided that compliance with those provisions should not be required (nor should there be any sanctions for noncompliance) until after the government can issue regulations or other administrative guidance.
Some provisions of the Affordable Care Act might be fine-tuned, causing modifications. Updated and detailed information about the Affordable Care Act can be found at HealthCare.gov , a federal government website managed by the U.S. Department of Health and Human Services.