ACA market reforms: preexisting conditions, annual and lifetime limits, essential health benefits, and medical loss ratio

Correct answer: It may not set any lifetime dollar limit on essential health benefits

The ACA prohibits group health plans and insurers offering group or individual coverage from establishing lifetime limits on the dollar value of benefits for any participant or beneficiary. The prohibition protects essential health benefits, and no dollar threshold or approval process makes such a limit acceptable.

Correct answer: 85%

The ACA requires insurers in the large-group market to spend at least 85% of premium on medical care and health-care quality improvement. The individual and small-group minimum is 80%.

Correct answer: Permitted, because the ban on annual limits applies to essential health benefits, and the limit is otherwise allowed by law

The annual and lifetime limit ban protects essential health benefits. The statute expressly allows plans to place annual or lifetime per-beneficiary limits on specific covered benefits that are not essential health benefits, to the extent federal or state law otherwise permits. Adult dental is not an essential health benefit, so a $1,000 annual cap is allowed.

Correct answer: Plan years beginning on or after January 1, 2014

The ban on preexisting condition exclusions for all enrollees took effect for plan years beginning on or after January 1, 2014. Children under 19 were protected earlier, from 2010. March 23, 2010 is the date the ACA was signed and the grandfathering cutoff date.

Correct answer: Long-term custodial care in a nursing home

The ten statutory categories of essential health benefits include maternity and newborn care, laboratory services, and rehabilitative and habilitative services and devices. Long-term custodial care is not among them; it is generally covered by long-term care insurance or Medicaid, not by major medical plans.

Correct answer: Yes, because he has not reached age 30 before the start of the plan year

A catastrophic plan may be offered only to individuals who have not attained age 30 before the beginning of the plan year, or who hold a certified exemption for unaffordable coverage or hardship. Catastrophic plans may only be offered in the individual market. Marcus is 28 and buying individually, so he qualifies.

Correct answer: The insurer owes rebates to its policyholders, because its ratio of 76% is below the 80% minimum

The medical loss ratio is the share of premium spent on medical care and quality improvement: $7.6 million divided by $10 million is 76%. The individual-market minimum is 80%, so the insurer falls short and must pay rebates to policyholders.

Correct answer: 70%

The ACA defines the metal levels by actuarial value: bronze 60%, silver 70%, gold 80%, and platinum 90%. A silver plan is designed to pay 70% of the full actuarial value of benefits for a standard population.

Correct answer: Health status

ACA rating rules allow premiums to vary only by age, tobacco use, geographic area, and family size. Health status may not be used, which, together with guaranteed issue and the ban on preexisting condition exclusions, keeps sick applicants from being priced out.

Correct answer: Yes, because for an adult like Rosa, a grandfathered individual policy is exempt from the federal ban

Under the federal Affordable Care Act, the main exception to the preexisting condition ban for an adult like Rosa is a grandfathered individual policy, one bought on or before March 23, 2010 and not materially changed. Grandfathered group plans are bound by the ban, but for an adult enrollee like Rosa a grandfathered individual policy is not, so under the federal rule her policy may keep its exclusion. State law can add its own protections, which is why the question asks only about the federal ban.

Correct answer: 26

A group health plan or insurer offering group or individual coverage that provides dependent coverage of children must continue to make it available for an adult child until the child turns 26. The plan need not cover that child's own children.

Correct answer: Nothing

Group health plans and insurers must cover evidence-based items and services with an A or B rating from the U.S. Preventive Services Task Force without imposing any cost-sharing. That means no copay, coinsurance, or deductible for the screening.

Correct answer: Copayments for covered essential health benefits

Cost-sharing includes deductibles, coinsurance, copayments and similar charges for covered essential health benefits, and those count toward the annual out-of-pocket maximum. The statute expressly excludes premiums, balance billing for non-network providers, and spending for non-covered services.

Correct answer: The share of premium revenue spent on medical care and health-care quality improvement

The medical loss ratio is the portion of premium an insurer spends on clinical care and activities that improve health-care quality, as opposed to administration, marketing and profit. It is an aggregate spending measure, not a measure of any individual's coverage.

Correct answer: Platinum

The platinum level is designed to provide benefits actuarially equivalent to 90% of the full actuarial value. Gold is 80%, silver 70%, bronze 60%.

Correct answer: It applies to grandfathered plans as well as new plans

The prohibition on lifetime dollar limits applies even to grandfathered plans. By contrast, grandfathered individual policies are exempt from the preexisting condition ban, and grandfathered plans need not cover the essential health benefits package.

Correct answer: A typical employer plan

The Secretary must ensure that the scope of the essential health benefits is equal to the scope of benefits provided under a typical employer plan, informed by a Department of Labor survey of employer-sponsored coverage.

Correct answer: Yes, because nothing in the law prohibits a plan from providing benefits in excess of the essential health benefits

The essential health benefits are a floor, not a ceiling. The statute's rule of construction says nothing in the title prohibits a health plan from providing benefits in excess of the essential health benefits.

Correct answer: The individual market only

If a health insurance issuer offers a catastrophic plan, it may only offer that plan in the individual market.

Correct answer: Yes, until she turns 26

A plan that offers dependent coverage of children must make it available to an adult child until age 26. Living away from home, being employed part time, and not being a student do not end eligibility before 26.

Correct answer: Policyholders, or the employer that bought the group coverage

An insurer that spends less than the required share of premium on care and quality improvement must rebate the difference to its policyholders. For group coverage the rebate goes to the employer or plan sponsor, which may pass the employees' share through to them.

Correct answer: The client is wrong, because a deductible is cost-sharing paid by the member, not a cap on the dollar value of benefits the plan pays

The ACA bans annual and lifetime limits on the dollar value of benefits, meaning caps on what the plan will pay. Deductibles, coinsurance and copayments are cost-sharing, which the law recognizes and controls separately through the annual limitation on cost-sharing.

Correct answer: 80%

Insurers in the individual and small-group markets must spend at least 80% of premium on medical care and health-care quality improvement. The large-group minimum is 85%.

Correct answer: Rehabilitative and habilitative services and devices

Rehabilitative and habilitative services and devices are a named essential health benefit category. Habilitative services help a person gain skills never acquired, and rehabilitative services restore lost function. Adult dental, cosmetic surgery and custodial care are not essential health benefits.

Correct answer: For a standard population, the plan is designed to pay about 80% of covered costs, with enrollees paying about 20% through cost-sharing

Gold-level coverage is designed to be actuarially equivalent to 80% of the full actuarial value of benefits, measured across a standard population. On average the plan pays about 80% and enrollees about 20%, though any one person's share varies.

Correct answer: Accept her at a premium based only on permitted factors, without excluding or surcharging for the diabetes

Non-grandfathered individual coverage is guaranteed issue, may not impose a preexisting condition exclusion, and may be rated only on age, tobacco use, geographic area and family size. The insurer must accept her, cover her diabetes, and price her without regard to her health.

Correct answer: Coverage must be provided without any prior authorization requirement

A qualified health plan must cover emergency department services without imposing any prior authorization requirement, and may not limit out-of-network emergency coverage more restrictively than in-network coverage.

Correct answer: Prohibited, because plans may not set lifetime dollar limits on essential health benefits such as hospitalization

Group health plans and insurers may not establish lifetime limits on the dollar value of benefits. Hospitalization is an essential health benefit, so a $2 million lifetime cap on it is prohibited no matter how high the figure.

Correct answer: Only a restricted annual limit, as defined by the Secretary

For plan years beginning before January 1, 2014, plans could impose only a restricted annual limit on the dollar value of essential health benefits, as defined by the Secretary to preserve access to needed services with minimal premium impact. From 2014 annual limits on essential health benefits were barred entirely.

Correct answer: That is a misunderstanding: the medical loss ratio governs how the insurer spends its total premium revenue, not her personal cost-sharing

The 80/20 rule is the medical loss ratio: an aggregate measure of how much premium an insurer spends on care and quality improvement. It does not limit any individual's cost-sharing. That is governed by the plan's design, its metal level, and the annual out-of-pocket maximum.

Correct answer: Immunizations recommended by the CDC's Advisory Committee on Immunization Practices

Plans must cover, without cost-sharing, immunizations that have in effect a recommendation from the Advisory Committee on Immunization Practices of the CDC for the individual involved, along with USPSTF A- and B-rated services and HRSA-supported preventive care for children and women.

Correct answer: $2,400

Only cost-sharing for covered benefits counts: the $1,500 deductible plus $900 coinsurance equals $2,400. Premiums and spending on non-covered services are expressly excluded from cost-sharing.

Correct answer: Bronze

The bronze level is designed to provide benefits actuarially equivalent to 60% of the full actuarial value. A catastrophic plan is a separate, non-metal option that pays nothing until the annual cost-sharing limit is reached, except preventive care and three primary care visits.

Correct answer: Maternity and newborn care is an essential health benefit, and plans may not set annual dollar limits on essential health benefits

Maternity and newborn care is a named essential health benefit category, and since 2014 group plans and insurers may not impose annual limits on the dollar value of essential health benefits. Annual caps are permitted only on benefits that are not essential health benefits.

Correct answer: March 23, 2010

A grandfathered plan is one in existence on March 23, 2010, the date the ACA was signed, that has not been materially changed. October 1, 2013 was the start of the first exchange open enrollment, and January 1, 2014 is when most market reforms took effect.

Correct answer: Yes, pediatric services including oral and vision care are an essential health benefit category

Pediatric services, including oral and vision care, are one of the ten essential health benefit categories, so a child's vision care must be covered in non-grandfathered individual and small-group plans.

Correct answer: A rolling three-year average

The medical loss ratio is calculated as a rolling three-year average, which smooths year-to-year swings in claims. It is measured across an insurer's block of business in a market, not policy by policy.

Correct answer: Because mental health and substance use disorder services, including behavioral health treatment, are a required essential health benefit category, and rich coverage elsewhere cannot substitute

Each of the ten statutory categories must be included. Mental health and substance use disorder services, including behavioral health treatment, is one of them, and generous coverage in other categories does not cure its omission.