The Affordable Care Act (ACA, also known as Obamacare) ushered in numerous new health insurance regulations. We often hear health coverage described as being “ACA-compliant,” but what does that mean? ACA compliance is required for most types of health coverage, but the specifics vary from one type of health plan to another.
Individual/Family Coverage
Individual/family health plans are policies that people purchase on their own, as opposed to obtaining from an employer. These plans can be purchased in the health insurance exchange or directly from a health insurance company. Here’s how ACA compliance works for individual/family health plans:
- Policies are guaranteed-issued during open enrollment or special enrollment periods.
- Pre-existing conditions are covered.
- Premiums can only be based on age (three-to-one maximum ratio), location, tobacco use, and the number of family members enrolling in coverage.
- Policies must cover the essential health benefits, with a cap on out-of-pocket costs for in-network care.
- Policies cannot impose annual or lifetime dollar limits on any essential health benefit.
- Young adults can remain on a parent’s plan until age 26.
- Medical loss ratio rules require these plans to spend at least 80% of premiums on medical care and quality improvements.
Small Group Coverage
In most states, “small group” means that the employer has up to 50 employees (or up to 100 employees in California, Colorado, New York, or Vermont). The rules for ACA compliance in the small group market are essentially the same as the rules that apply in the individual/family market:
- Policies are guaranteed-issue for small businesses to purchase year-round (there’s a one-month window each fall when employers can enroll if they don’t meet the normal participation or employer contribution requirements; for employers that do meet those requirements, plans are available for purchase at any time). Employees can join when they’re initially eligible, during open enrollment, or during a special enrollment period.
- Pre-existing conditions are covered.
- Premiums can only vary based on age, location, tobacco use, and family size.
- Policies must cover the essential health benefits, with a cap on out-of-pocket costs for in-network care.
- Policies cannot impose annual or lifetime dollar limits on any essential health benefit.
- Young adults can remain on a parent’s plan until age 26.
- Medical loss ratio rules require these plans to spend at least 80% of premiums on medical care and quality improvements.
Large Group Coverage (Including Self-Insured Coverage)
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Employers with 51 or more employees (or 101 or more employees in California, Colorado, New York, or Vermont) can obtain coverage in the large group market.
Most large employers choose to self-insure instead of purchasing health coverage from an insurance company. Self-insured plans are still required to be ACA-compliant, but self-insured plans are allowed to follow large group rules, even if the self-insured business has fewer than 50 employees.
Large group and self-insured health plans are ACA-compliant, but the ACA rules that apply to them are not the same as those of individual and small group health plans. For large group and self-insured plans, ACA compliance means:
- Policies are guaranteed-issue for businesses to purchase year-round. Employees can enroll when they’re initially eligible, during the annual open enrollment period, or during a special enrollment period. As soon as coverage takes effect, pre-existing conditions must be covered without a waiting period.
- Policies must provide minimum value (cover at least 60% of healthcare costs for a standard population, and provide substantial coverage for inpatient and physician services) and be considered affordable (for just the employee, but not necessarily for family members), or else the employer risks a penalty under the ACA’s employer mandate.
- Policies must fully cover the cost of certain preventive care. The rest of the essential health benefits are not required to be covered, but most large group plans do cover them. For any essential health benefits covered under a large group plan, there cannot be any dollar limits on annual or lifetime benefits.
- The same out-of-pocket maximum that applies to individual and small group plans applies to large group plans.
- Young adults can remain on a parent’s plan until age 26.
- Medical loss ratio rules apply to fully insured large group plans (they must spend at least 85% of premiums on medical costs and quality improvements), but they do not apply to self-insured plans.
We proudly insure the residents of North Carolina, and are your local independent insurance agent. We can provide coverage from many insurance carriers so you receive the insurance for your budget and needs! Still have questions on ACA compliant coverage? Call us at (252) 637-4173 or visit our website https://www.ticnc.com/health-insurance-open-enrollment/.
Source: https://www.verywellhealth.com/aca-compliant-health-insurance-5194049