Understanding Insurance Plans and Laws
November 16, 2016
Types of Plans
Certain therapies for individuals with autism may be covered under their health plan. The types of therapies that are covered and the amount of out of pocket expenses will vary depending on the type of plan covering the individual.
Fully Insured Plan
Fully Insured Plan
Offered by an employer or purchased by individuals in the Health Insurance Marketplace
A fully insured plan is one in which an individual or an employer pays an insurance company to assume the risk of insuring the individual(s) and pays claims for covered treatment and services. Fully insured plans purchased in the state of New Jersey are required to comply with New Jersey insurance laws.
Offered by employers (typically large employers)
A self-funded plan is one in which an employer directly assumes the risk of covering health related expenses. Often, self-funded plans are administered by insurance companies that will process claims and make payments on the employer’s behalf. Self-funded plans are required to comply with certain federal laws, but not with state laws.
Public Health Plan
Public Health Plan
Offered through Medicaid and the Children’s Health Insurance Program (CHIP), and is available to individuals with and without disabilities who meet certain income guidelines
A public health plan is one run by the state to cover individuals with low income and/or disabilities. New Jersey FamilyCare is a state- and federally-funded public health insurance program administered by The Division of Medical Assistance and Health Services (DMAHS). New Jersey FamilyCare includes the Children’s Health Insurance Program (CHIP), Medicaid and Medicaid expansion.
Laws that May Impact Coverage
Other factors that impact coverage are federal and state laws. Not all laws apply to all types of plans. Whether or not a plan must comply with certain laws varies depending on factors such as: whether or not the plan is private or public; if it is offered through an employer or purchased individually; and whether a private plan is fully insured or self-funded.
Mental Health Parity
Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008
Federal Law: Applies to fully-insured and self-funded group health plans that cover 50 or more employees
The Mental Health Parity and Addiction Equity Act (MHPAEA) requires group health plans and HMOs to provide coverage for mental health and substance use disorder according to the same terms that they provide medical and surgical benefits. The law was passed to ensure that mental health treatment would not be unfairly restricted by plans that offer mental health coverage. For example, financial responsibility (such as copayments and deductibles) and treatment limitations (such as maximum number of visits) for mental health and substance use treatment cannot be more restrictive than medical and surgical treatment. The law applies to both self-funded and fully insured plans covering more than 50 employees. Small employer plans covering fewer than 51 employees are exempt from MHPAEA, but those offering fully insured plans are still subject to state mental health parity laws.
The Centers for Medicare & Medicaid Services offer a fact sheet that summarizes the law’s requirements.
The Patient Protection and Affordable Care Act (ACA) — “Affordable Care Act”
Federal Law: Applies to individual and small group plans purchased in the New Jersey marketplace; certain requirements apply to self-funded plans and public health insurance
The ACA, also called the “Affordable Care Act,” is the federal health insurance reform law that offers increased protections for consumers and increases access to affordable care. The law allows states the option to expand Medicaid coverage to more individuals. It also creates health insurance marketplaces where individuals, families and small employers can purchase private insurance plans.
The extent to which the ACA applies to a plan depends on if it is a: (a) fully insured plan purchased in marketplace, (b) self-funded plan, or (c) public health plan.
a. Individual and small employer plans purchased in the health insurance marketplace are required to provide ten of what the ACA calls “essential health benefits” (EHB), which include mental health services and habilitative services. The EHB categories are broad, allowing individual states to specifically define essential health benefits according to an existing “benchmark plan”within the individual and small group markets. Because New Jersey’s benchmark plan includes coverage required by state mandates, the Autism and Other Developmental Disabilities mandate applies to any plan purchased in the marketplace.
b. Non-grandfathered self-funded plans (those that were created after the passage of the ACA in 2010) must follow almost all of the ACA rules, such as prohibiting annual and lifetime coverage limits and arbitrary cancellations of coverage. However, there are a few ACA exceptions for all self-funded plans (grandfathered or not).
A major exception is essential health benefits. Although self-funded plans may offer benefits that are considered EHBs, they are not required to do so. For example, a self-funded plan may offer mental health benefits but because it is federally regulated, it does not have to adopt state benchmarks. Therefore, these plans can still elect what types of mental health benefits they offer (which may or may not include Applied Behavior Analysis for autism). However, self-funded plans are still prohibited from setting dollar amount caps on benefits that are considered EHBs.
c. Public health insurance programs under Medicaid and NJ FamilyCare are also required to offer the minimum EHB categories, but since the state is not required to select a plan from the individual or group markets as a benchmark, New Jersey’s insurance mandates are not used to define EHBs for Medicaid and NJ FamilyCare plans.
More information about the Affordable Care Act is available at www.healthcare.gov
The New Jersey Biologically Based Mental Illness (BBMI) Mandate
State Law: Applies to fully-insured individual and small group plans purchased in the New Jersey Marketplace
In 1999, New Jersey enacted a law that required all health insurers in the state to cover treatment of certain “biologically-based mental illness,” which included pervasive developmental disorder or autism under its definition. The law required that treatment provided for BBMI must be covered according to the same conditions for other illnesses and diseases. This meant that copayments, deductibles, and limits on visits for the treatment of biologically-based mental illness would need to be at least equal to those allowed for medical and surgical benefits.
The New Jersey Autism and Other Developmental Disabilities Mandate
State Law: Applies to fully-insured individual and small group plans purchased in the New Jersey Marketplace, and to the NJ State Health Benefits and the School Employees’ Health Benefits Programs.
In 2009 New Jersey passed a mandate, P.L. 2009 c. 115 Health Benefits Coverage for Autism and Other Developmental Disabilities, which requires fully-insured plans written in the state of New Jersey to cover the following for autism and other developmental disabilities:
- Expenses for screening and diagnosis of autism spectrum disorders (ASD) or other developmental disability (DD);
Medically necessary physical therapy, occupational therapy and speech therapy for individuals with ASD or other DD;
- Medically necessary behavioral intervention based on the principles of applied behavior analysis (ABA) for individuals with ASD; and
- Certain family cost share expenses incurred through New Jersey Early Intervention. Autism and Health Insurance Benefits provides an overview of coverage for autism-related therapies.
Updates to the Mandate since 2009 Passage:
- Due to the passage of the Affordable Care Act, the dollar amount cap of $36,000 a year no longer applies for ABA treatment.
- In addition, two recent amendments to the Autism and Other Developmental Disabilities mandate were adopted that expand the benefits available to people with autism. One amendment removes the age limit of 21 for ABA, and another removes the 30-visit limit for speech, occupational and physical therapy for autism.