By Joanne Kenen

Essential Health Benefits.
Minimum Essential Coverage.
Minimal Value.

They may sound alike, but they are different under the Affordable Care Act. And it can be pretty confusing.

It may help to think of it this way: Essential coverage is the health plan. If you have an essential coverage plan you meet the individual mandate. No penalty. Period.

Minimum essential coverage includes Qualified Health Plans in the exchanges, in the individual market outside the exchanges, small group plans, job-based coverage, Medicare, Medicaid, etc. Something limited in scope, like workers’ compensation or a dental plan is not essential coverage.

Do all plans that meet the essential coverage requirements include all the essential benefits? No.

Essential benefits are the core benefits in a health plan in the individual market (in the exchanges and outside the exchanges) and small group (small business) market. There are exceptions, or at least transitions.

There are 10 broad categories of essential benefits, such as hospitalization, maternity and newborn care, etc. States have some leeway in how they fill those 10 benefits. They are quite similar state to state, but not identical.

The transitions: Grandfathered plans don’t have to cover all of the essential health benefits while they maintain their grandfathered status. And the plans that were supposed to have been canceled but, under the administration’s policy change, can be extended also don’t have to upgrade to cover them all yet either. (States can choose whether to extend them, and it’s optional for insurers too.)

Once the employer mandate kicks in, plans will have to meet certain requirements or the employer will face penalties. There are two kinds of penalties  – one based on whether the employer is offering affordable coverage, and the other based on the breadth of the coverage. They won’t have to meet the essential health benefit requirement – most large companies already offer fairly comprehensive coverage. But they have to offer plans that are a) affordable, and b) have “minimal value” (60 percent of actuarial value). There will be penalties for both.

In some sectors, such as service or retail, some employers may decide to offer “skinny” or noncomprehensive plans and pay the penalties. But the employee won’t be penalized – it’s still minimal essential coverage.

Remember, actuarial value is basically the share of the costs the plan pays versus what the policy holder pays in deductibles, copays, etc. (but not including premiums). In the marketplace, a bronze plan has a 60 percent actuarial value, a silver has 70 percent, a gold plan has 80 percent and a platinum has 90 percent. Actuarial value applies to the population covered by a plan – not to each individual covered by the plan.

Remember, businesses with fewer than 50 employers don’t have an employer mandate. Coverage is optional.

Businesses with 50 to 99 workers will have a mandate, but it’s been postponed again. It’s now effective in 2016.

Larger businesses with 100 or more workers (most of which already offer fairly comprehensive coverage to workers) only need to cover 70 percent of workers in 2015. The earlier requirement to cover 95 percent won’t apply until 2016.

Here are two fact sheets from the IRS that give more details:

• Individual shared responsibility provision – minimum essential coverage

• Questions and answers on the individual shared responsibility provision

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Joanne Kenen (@JoanneKenen), AHCJ’s Health Policy topic leader, is writing blog posts, tip sheets, articles and gathering resources to help our members cover the complex implementation of Health Policy. If you have questions or suggestions for future resources on the topic, please send them to joanne@healthjournalism.org.