Minimum essential coverage

The ACA seeks to improve the overall quality of health care insurance, in a couple of different ways. First, it required that all health plans offer the following essential benefits, which are already in effect:

  • An individual cannot be turned down for insurance due to a pre-existing condition.
  • Premiums cannot vary by gender – they can only vary by the state the individual is insured in, the age of the insured, and in some cases, whether the insured is a smoker.
  • Employer plans that cover dependents must offer coverage for employees’ adult children up to age 26, even if the child is no longer a dependent.

Second, the minimum essential coverage requirement requires a plan to provide the following 10 essential benefits in order to be sold on a Health Insurance Marketplace:

  1. Ambulatory patient services
  2. Emergency services
  3. Hospitalization
  4. Maternity and newborn care
  5. Mental health and substance use disorder services, including behavioral health treatment
  6. Prescription drugs
  7. Rehabilitative and habilitative services and devices
  8. Laboratory services
  9. Preventive and wellness services and chronic disease management
  10. Pediatric services, including oral and vision care.

Note that these are the services that a plan must provide in order to be sold on a Health Insurance Marketplace, but there are other plans that meet the requirement of minimum essential coverage without having to offer these essential benefits – there are some differences. It depends on where, how and sometimes when the insurance was purchased:

Group Must provide
essential benefits
Must limit cost-sharing
and deductible
Plans in Marketplace Yes Yes
Self-insured – New plan No No
Large group – New plan No Yes
Small group – New plan Yes Yes
Individual Yes Yes
Self-insured No No
Large group – Grandfathered No No
Small group – Grandfathered No No
Individual – Grandfathered No No
Qualifying plans

For taxpayers who already have health insurance, that coverage probably meets the minimum essential coverage requirement. As shown above, coverage under any of these government-sponsored programs qualifies as meeting the requirement:

  • Medicare
  • Medicaid or Children's Health Insurance Program (CHIP)
    Note: States can voluntarily expand Medicaid to cover anyone between the ages of 19-64 who earns up to 133% of the federal poverty level. Participating states will receive federal funds to pay the full cost of enrolling newly eligible people from 2014–2016, after which the share would gradually shrink until it reached 90% in 2022. Thirty-two states, including the District of Columbia, have adopted the Medicaid expansion.
  • TRICARE for Life. TRICARE is the health care program serving active duty service members, National Guard and Reserve members, retirees, their families, survivors and certain former spouses. TRICARE for Life is TRICARE's Medicare-wraparound coverage, available to all Medicare-eligible TRICARE beneficiaries.
  • Veterans’ health care
  • Health care plan available to Peace Corps volunteers

In addition, the following plans meet the requirement:

  • Employer-sponsored plans, provided that:
    • The plan covers at least 60% of covered costs
    • The employee’s cost for self-only coverage is not more than 9.5% of the employee’s household income. (If the cost is more than 9.5% of household income, the employee may opt out of coverage and be eligible for a subsidy to purchase insurance through a Health Insurance Marketplace.)
  • A health plan offered in the individual market or a Health Insurance Marketplace
  • Coverage under a grandfathered health plan
  • Any other health benefits coverage – such as a state health benefits risk pool – that the Secretary of Health and Human Services and the IRS recognize as qualifying.
What are the insurance options?

Click the image below to view a flowchart that explains the various insurance coverage options that satisfy ACA requirements.

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