Essential Health Benefits

What are essential health benefits?

The ACA requires all qualified health insurance plans including those offered through the marketplaces, those offered in the individual and small group markets outside the marketplaces (except grandfathered plans), and the Alternative Benefit Plans offered to individuals who are part of the Medicaid expansion, include 10 categories of health services known as the essential health benefits(EHB).

The 10 categories of essential health benefits are:

  • Hospitalization;
  • Emergency services;
  • Ambulatory (i.e. outpatient) services;
  • Prescription drugs;
  • Rehabilitative and habilitative services and devices;
  • Mental health and substance abuse disorder services including behavioral health treatment;
  • Preventative and wellness services and chronic disease management;
  • Pediatric services including dental and vision care;
  • Laboratory services; and
  • Maternity and newborn care.

Why is this important to people with I/DD?

Many people with I/DD will benefit from the inclusion of habilitative and rehabilitative services and devices, mental health and behavioral services, chronic disease management and pediatric services including dental and vision care. Currently, private health insurance may limit the availability of some of these services.

Did HHS define the EHB?

The regulations do not define what is covered by essential health benefits. Each of these broad categories of services could include many health services, for example the rehabilitative and habilitative services and devices could include occupational, physical speech and music therapy, durable medical equipment, prosthetics and orthotics, hearing aids, and many other health care services. The regulations also do not set a standard for what is sufficient or adequate coverage of a benefit.

What is the process for establishing the EHB?

The regulations require states to choose an existing plan as a benchmark for the plans that will be sold in the marketplace. States must then enhance that benchmark plan in areas where it does not cover all 10 of the required essential health benefit categories. States are provided significant flexibility to pick from several different types of health plans to be their benchmark and allow some substitution of benefits within the categories. After states (or the federal government in states that the federal government is running the marketplaces) finalize the benchmark plans the insurance companies can use those benchmarks to prepare plans to be certified and sold in the marketplaces.

What other provisions of the law guide the development of the EHB to meet the needs of people with disabilities?

The law also requires:

  • An “appropriate balance” among the ten categories of essential care. The Arc views this, in part, as a prohibition of unreasonable restrictions and exclusions in one benefit category (e.g., rehabilitation) if similar restrictions are not placed on other categories;
  • Benefit design that does not discriminate against, and takes into account the health care needs of, persons with disabilities. As part of this, health plans may be required to disclose severity-adjusted quality indicators of access, outcomes, consumer satisfaction and disenrollment rates; and
  • Essential benefits are not subject to denial to individuals against their wishes on the basis of the individual’s present or predicted disability, degree of medical dependency, or quality of life. This is intended to ensure that negative judgments about the quality of life of a person with a disability are not used against people with disabilities when establishing the essential benefits package.

Has HHS developed regulations on these important provisions?

The regulations restate the necessity that plans meet these standards but do not provide further guidance on how to do so. It is expected that future regulations or guidance will provide more information on how to meet these standards.

What is covered by habilitative and rehabilitative services and devices?

This is intended to broadly cover a number of important services, including durable medical equipment, prosthetics, orthotics, and habilitative and rehabilitative services.

What is habilitation?

The Medicaid program defines habilitation services as “services designed to assist participants in acquiring, retaining and improving the self-help, socialization, and adaptive skills necessary to reside successfully in home and community-based settings.” Many different services, therapies and supports are considered to be habilitation. For example, habilitation may include teaching someone with a developmental disability:

  • basic social skills;
  • how to administer his/her own medication safely;
  • about his/her rights to privacy;
  • how to use a phone;
  • how to ask a healthcare professionals questions and expect to get answers; and
  • how to reliably report how they are feeling.

Are there other definitions of habilitation?

There has been considerable debate about what habilitation means and how it should be covered. Insurers and others do not want a broad definition such as the Medicaid definition and have pushed for a more narrow interpretation. The HHS proposed rules on how plans should describe the key benefits defined habilitation as:

“Health care services that help a person keep, learn or improve skills and functioning for daily living. Examples include therapy for a child who isn’t walking or talking at the expected age. These services may include physical and occupational therapy, speech-language pathology and other services for people with disabilities in a variety of inpatient and/or outpatient settings.”

While more narrow than the Medicaid definition, it does address many of the habilitation services. Ensuring that habilitation includes learning a new skill or function is a critical aspect of the definition.

What is rehabilitation?

In proposed rules, HHS defines rehabilitation as follows: “Health care services that help a person keep, get back or improve skills and functioning for daily living that have been lost or impaired because a person was sick, hurt or disabled. These services may include physical and occupational therapy, speech-language pathology and psychiatric rehabilitation services in a variety of inpatient and/or outpatient settings.”

What did Congress intend regarding the definition of rehabilitation and habilitation?

States will likely decide how these terms will be defined. As states debate different definitions, it is important to consider what Congress intended. Congress is familiar with the definition of habilitation used by the Medicaid program. It has been in the statute for many years. During the House debate, then-Chairman George Miller, House Committee on Education and Labor, explained that the term rehabilitative and habilitative services “includes items and services used to restore functional capacity, minimize limitations on physical and cognitive functions, and maintain or prevent deterioration of functioning. Such services also include training of individuals with mental and physical disabilities to enhance functional development.” [Congressional Record, H1882 (March 21, 2010)]

How is habilitation different from rehabilitation?

The key difference is that habilitation usually refers to acquiring or learning skills whereas rehabilitation is usually involves regaining skills that have been lost or improving or preventing deterioration of skills. There are many anecdotal examples of the unfair practice of a service being approved for rehabilitation purposes but not for habilitation:

An occupational therapist teaching adults with developmental disabilities the fine motor coordination required to dress themselves An occupational therapist teaching adults who have had a stroke the fine motor skills required to re-learn how to dress themselves
A speech therapist providing speech therapy to a 3-year old with autism who has never had speech A speech therapist providing speech therapy to a 3-year old to regain speech after a traumatic brain injury
A physical therapist providing a strength training program for an individual with a congenital spine condition to prevent osteoporosis and decline in function as he ages A physical therapist providing a strength training program for an individual who recently acquired a spinal cord injury
A physical therapist making a splint for an adult with a chronic condition, such as arthritis, to prevent hand deformities A physical therapist making a splint for an adult who has had hand surgery for a torn tendon

Does private insurance cover habilitation?

A few states have mandates that require habilitation services for children. For instance, many of the states with autism mandates use the term habilitation to cover the broad range of services and supports required in that state. However, some insurance plans may refuse services such as those described in the chart above that they view as habilitation.

What if a state picks a benchmark plan that does not include habilitation services?

HHS has said that states have a lot of flexibility in how they add benefits, but they must make sure habilitation is added. In its study of essential benefits, the Institute of Medicine (IOM) recommended that the states look toward Medicaid:

“The committee is guided by the unambiguous direction of Section 1302 to start with a commercial health insurance benefit; however, it suggests that the Secretary compare, in particular, how Medicaid plan benefits for habilitation and mental health and substance abuse services compare with commercial plans that currently include such services. For example, Maryland has requirements to cover habilitation services in children under age 19 in its small business standards for health insurance (Maryland Insurance Administration, 2009). On the basis of this review, the Secretary would add selected services to the preliminary list to fulfill the 10-category requirement.” IOM Report: Essential Benefits: Balancing Coverage and Cost (2011), p. 5-3

What if the state does not define habilitation?

If habilitation is not covered in the base benchmark and the state does not define it then it must meet one of the following:

  • provides parity by coving habilitative services benefits that are similar in scope, amount, and duration to benefits covered for rehabilitative services; or
  • is determined by the insurance issuer and reported to HHS.

It is expected that HHS will assess in 2015 the experience of the states and insurance plans with habilitation and revise the regulations as necessary. It will be important for people with disabilities and advocates closely monitor whether this service is available and adequate in preparation for future discussions.