Brief Commercial Health Insurance Mandates: State and Federal Roles

As federal and state policymakers seek to improve access to care and ensure adequate coverage, many states have enacted health insurance mandates for certain services, providers and categories of dependents for consumers.  

Health insurance mandates—enacted at either the federal or state level—usually fall into one of three categories:  

1. A requirement that health plans cover various health care services or treatments. Common mandates include services and treatment for mental and behavioral health, autism, diabetes, contraception, infertility, cancer and others.  
2. A requirement that health plans include coverage for treatment by providers (besides physicians), such as nurse practitioners, physician assistants, dentists, optometrists, chiropractors and others.  
3. A requirement that health plans cover dependents and other related individuals, such as adopted children, dependent students, grandchildren and domestic partners.  

All 50 states and Washington, D.C., maintain multiple health insurance mandates in statute. However, the scope of mandates varies greatly across states and might specify, for example, when an insurer must provide coverage, how often an insurer must cover a service or cost-sharing requirements for enrollees.  

Opponents of health insurance mandates argue they result in higher premiums for consumers and costs to insurers. Proponents argue premium costs may be higher without health insurance mandates, since patients may otherwise forgo care and subsequently require more costly care in the future.  

State-Regulated Health Plans vs. ERISA Plans 

State health insurance mandates affect only certain state-regulated health plans, such as insurance plans sold on the Affordable Care Act’s individual and small group marketplaces and fully insured employer-sponsored plans. However, these laws do not affect self-funded employer-sponsored health plans, meaning the employer directly funds the medical costs of their workers. These plans cover roughly 65% of covered workers.  

This limitation is due to the federal Employee Retirement Income Security Act (ERISA), which preempts state laws and regulations that directly, or sometimes indirectly, apply to self-funded health plans. Federal policymakers have the authority to establish health insurance mandates for self-funded employer-sponsored health plans.  

Federal Essential Health Benefits and State Roles 

The Affordable Care Act (ACA) requires all non-grandfathered health insurance plans sold on the individual and small group marketplaces to cover the 10 essential health benefits (EHBs). These EHB categories include: 

1. Ambulatory patient services. 
2. Emergency services.  
3. Hospitalization. 
4. Maternity and newborn care. 
5. Mental health and substance use disorder services. 
6. Prescription drugs. 
7. Rehabilitative and habilitative services and devices. 
8. Laboratory services. 
9. Preventive and wellness services and chronic disease management. 
10. Pediatric services. 

EHB categories are purposely broad and states dictate coverage specifics by selecting an EHB benchmark plan. These EHB benchmark plans must be equal to the scope of benefits available through a “typical” employer plan. Insurers then use this state benchmark plan as a floor to determine its coverage benefits for individual and small group plans.  

The Centers for Medicare and Medicaid Services (CMS) maintains a list of EHB benchmark plans for all 50 states and D.C. 

The Interaction of EHBs and State Health Insurance Mandates 

Since states had several health insurance mandates on the books prior to the ACA, EHB benchmark plans must incorporate state-mandated benefits that apply to individual and small group plans. However, CMS required states to defray any additional premium costs associated with new health insurance mandates that exceed EHB coverage enacted after 2011.  

Increased Flexibility for Updating EHB Benchmark Plans 

Beginning in plan year 2020, CMS provided states with greater flexibility for updating their EHB benchmark plans. Specifically, states can modify their EHB benchmark plan by: 

1. Selecting an EHB benchmark plan from another state used during the 2017 plan year. 
2. Replacing one or more categories of EHBs with the same category or categories of EHB from the EHB benchmark plan of another state used in plan year 2017. 
3. Otherwise selecting a set of benefits that would become the state’s EHB benchmark plan.  

States that update their EHB benchmark plan through this new flexibility will not be subject to defrayal requirements associated with establishing a new state health insurance mandate.  

CMS maintains a list of states that have recently updated their EHB benchmark plans since plan year 2020.  

Other Federal Health Insurance Mandates 

Beyond the ACA’s essential health benefits, various other federal laws have established health insurance mandates for certain services and treatments. Please note this is not a comprehensive list.  

• The ACA requires all private health insurance plans—including fully funded and self-funded large group health plans—cover a wide-range of recommended preventive services. Grandfathered health plans are exempt from this requirement. This coverage requirement is distinct from EHB coverage for preventive services, which applies only to individual and small group plans sold on the ACA marketplaces.  
• The Mental Health Parity and Addiction Equity Act (MHPAEA) prohibits group health insurance plans that provide mental health or substance use disorder benefits from imposing less favorable benefits than those for medical/surgical services. The ACA extended these requirements to individual health insurance plans.  
• The Newborns’ and Mothers’ Health Protection Act prohibits certain restrictions from group health plans for hospital stays related to a childbirth.  
• The Women’s Health and Cancer Rights Act requires group health plans offering mastectomy coverage to also provide coverage for certain services related to the mastectomy, including breast reconstruction.