Are Essential Health Benefits Covered by Group Health Insurance Plans?

Small Business

Are Essential Health Benefits Covered by Group Health Insurance Plans?

Published on April 23, 2018

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Business owners may find that the Affordable Care Act has impacted the way they offer group health insurance plans to employees. For instance, typical group health insurance must include the ACA’s essential health benefits.
The size of the employer, current group plans in place, and even the state can have some impact on the rules about the ten essential benefits. Also, employers have some discretion about their choice to offer a group health insurance plan that meets the government’s definition of minimum essential coverage. As a small business owner, you may not even be required to offer health insurance of any kind, but according to Healthinsurance.org, if you do decide to offer health insurance, make sure you know exactly what you’re offering your employees.

Do group health insurance plans need to include essential health benefits?

The Kaiser Family Foundation describes the ten essential benefits as broad categories of healthcare services. These categories include hospitalization, maternity and mental health care, outpatient services, and others important kinds of healthcare.

The ACA rules require insurance companies to offer small businesses a new group plan that offers this minimum essential coverage. Larger employers could face penalties if their plan doesn’t cover the essential health benefits; however, some small business owners may find that offering these ten essential benefit will help them earn tax benefits for providing qualified health insurance, although it’s not mandatory.
This list briefly touches upon the way that ACA requirements for essential health benefits from a group health insurance plan could affect employers:

  • The law allows insurance companies to grandfather older plans that their clients might have already had (grandfathered plans may not include the ten essential benefits). Small businesses may not have to switch plans; however, some companies may have an incentive in the form of  tax credits if they do.
  • Each state has some leeway to determine how average employer plans should work within the state. These “state benchmark plans” may vary somewhat in different parts of the country. Any health insurance company authorized to conduct business in the state will know the rules and can offer information about appropriate group plans that offer the ten essential benefits.
  • Smaller companies with fewer than 50 employees usually don’t have to provide health insurance to employees. Companies with fewer than 50 employees might not need to offer group medical plans; however, the companies will need to comply with ACA rules if they want to earn tax credits. This means, if you want to benefit from the small business health-care tax credit, you will likely need to offer a group plan with the essential health benefits.
  • Laws governing large groups with at least than 50 employees or self-funded insurance are somewhat more complex. According to this flowchart from the  KFF, these big companies could face penalties if they do not provide coverage with essential health benefits and employees seek coverage on the ACA Marketplace.

In other words, the government offers incentives for small businesses to offer health insurance that provides essential health benefits. The government also may penalize larger companies that don’t have group plans that will cover the ten essential benefits. It’s fair to say that the ACA does not force any business to offer essential health benefits; however, the rules strongly encourage offering ACA-qualified group health plans.
The reason for these rules is because individual employees may qualify for tax credits if they lack access to qualified group plans and can apply for individual health insurance. The government hopes to encourage employers to assume more responsibility by offering major medical insurance that includes the essential health benefits.

How to find group health insurance plans

Business owners can find a variety of group health insurance plans by entering their ZIP code and the size of their employee group on the quote form at eHealth. Employer and employee contributions vary by plan, the average age of employees, and location. Of course, eHealth also offers information about individual health insurance and other types of coverage.

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