Consumer Protections
The ACA established comprehensive consumer protections that fundamentally changed how health insurance is sold and administered. These protections apply to most individual and group health plans.
Guaranteed Issue
What Guaranteed Issue Means
| Feature | Description |
|---|
| Definition | Insurers must accept all applicants |
| No denial | Cannot refuse coverage for any reason |
| Health status irrelevant | Pre-existing conditions don't affect eligibility |
| Applies to | Individual and small group markets |
Before vs. After ACA
| Pre-ACA | Post-ACA |
|---|
| Could deny coverage based on health | Must accept all applicants |
| Could exclude pre-existing conditions | No exclusions allowed |
| Could charge unlimited amounts for health conditions | Rating limited by age, tobacco, geography |
| Medical underwriting common | No medical underwriting |
Key Point: Before the ACA, only 5 states (ME, MA, NJ, NY, VT) required guaranteed issue in the individual market. Now it's federal law.
Community Rating
Modified Community Rating
| Factor | Allowed Variation |
|---|
| Age | Up to 3:1 ratio (oldest to youngest) |
| Tobacco use | Up to 1.5:1 ratio |
| Geographic area | Varies by rating area |
| Family size | Individual vs. family tiers |
Prohibited Rating Factors
| Factor | Status |
|---|
| Health status | Prohibited |
| Gender | Prohibited |
| Claims history | Prohibited |
| Industry/occupation | Prohibited |
| Genetic information | Prohibited |
Age Rating Example
| Age | Maximum Premium vs. 21-Year-Old |
|---|
| 21 | 1.0x (baseline) |
| 30 | ~1.1x |
| 40 | ~1.3x |
| 50 | ~1.8x |
| 64 | 3.0x (maximum) |
Exam Tip: The 3:1 age rating limit means a 64-year-old can only be charged up to 3 times what a 21-year-old pays for the same plan in the same area.
Essential Health Benefits (EHBs)
The 10 EHB Categories
| Category | Examples |
|---|
| 1. Ambulatory services | Office visits, outpatient services |
| 2. Emergency services | ER care, ambulance |
| 3. Hospitalization | Inpatient care, surgery |
| 4. Maternity/newborn | Prenatal, delivery, postnatal |
| 5. Mental health/substance abuse | Therapy, addiction treatment |
| 6. Prescription drugs | Formulary medications |
| 7. Rehabilitative services | Physical, occupational therapy |
| 8. Laboratory services | Blood tests, imaging |
| 9. Preventive/wellness | Screenings, vaccinations |
| 10. Pediatric services | Including dental and vision |
Who Must Cover EHBs
| Market | EHB Requirement |
|---|
| Individual market | Required |
| Small group (≤50 employees) | Required |
| Large group (51+ employees) | Not required (but most cover) |
| Self-insured plans | Not required |
| Grandfathered plans | Not required |
Preventive Care Coverage
Preventive Services at No Cost
| Category | Examples |
|---|
| Immunizations | Flu, COVID, childhood vaccines |
| Screenings | Cancer, cholesterol, diabetes |
| Well visits | Annual checkups |
| Women's preventive | Mammograms, contraception |
| Children's preventive | Vision, developmental screening |
Requirements
| Rule | Details |
|---|
| No cost-sharing | $0 copay, deductible, coinsurance |
| In-network | Must be with network provider |
| Rating required | Based on USPSTF A/B recommendations |
| Updates | New recommendations added over time |
Dependent Coverage to Age 26
Young Adult Coverage Requirements
| Feature | Details |
|---|
| Age limit | Until 26th birthday |
| Plan types | Individual and group plans |
| Residency | Doesn't matter |
| Student status | Doesn't matter |
| Marital status | Doesn't matter (but not grandchildren) |
| Financial dependence | Not required |
| Employment | Can have job offer with coverage |
Key Point: Young adults can stay on a parent's plan even if they are married, not a student, employed, or living independently—the only limit is age 26.
Prohibition on Limits
No Annual or Lifetime Limits
| Type | Pre-ACA | Post-ACA |
|---|
| Lifetime limits | Common ($1-2 million typical) | Prohibited on EHBs |
| Annual limits | Common ($100K-$1M typical) | Prohibited on EHBs |
Impact
| Benefit | Description |
|---|
| Catastrophic protection | No cap on benefits for serious illness |
| Cancer treatment | Can continue without hitting limit |
| Chronic conditions | Ongoing care covered without caps |
Appeals and External Review
Internal Appeals
| Requirement | Details |
|---|
| Right to appeal | All coverage denials can be appealed |
| Timeframe | Insurer must respond within set time |
| Urgent claims | Expedited process required |
| Information | Must explain reason for denial |
External Review
| Feature | Details |
|---|
| Independent review | By third-party reviewer |
| Binding decision | Insurer must comply |
| When available | After internal appeal exhausted |
| State vs. federal | Depends on state program |
Medical Loss Ratio (MLR)
MLR Requirements
| Market | Minimum MLR |
|---|
| Individual and small group | 80% |
| Large group | 85% |
What MLR Means
| Spending | Description |
|---|
| 80-85% | Must go to claims and quality |
| 15-20% | Maximum for admin, marketing, profit |
| Rebates | If MLR not met, rebates to consumers |
Exam Tip: MLR ensures insurers spend most of premium dollars on actual healthcare, not overhead. If they don't meet the threshold, they must rebate the difference to policyholders.