Originally posted by Laura Kerekes on June 4, 2015 on thinkhr.com.
The Affordable Care Act (ACA) requires nongrandfathered group health plans to limit the total cost-sharing (deductibles, co-pays, and co-insurance) paid by participants for in-network essential health benefits in a plan year. For the 2015 plan year, the ACA cost-sharing limits are $6,600 if self-only coverage or $13,200 if other than self-only coverage (i.e., family coverage). Often referred to as “out-of-pocket maximums,” the limits are subject to change for inflation each year.
For 2016, two important changes will take effect. First, the cost-sharing limits will increase to $6,850 and $13,700, respectively. Secondly, the self-only limit of $6,850 will apply to each covered person regardless of whether enrolled for self-only coverage or family coverage.
FAQ XXVII, released jointly by the Departments of Labor, Health and Human Services, and the Treasury, provides that:
- ACA cost-sharing limits apply to nongrandfathered group health plans, including “small” or “large” group policies and self-funded health plans.
- Deductibles, co-pays, and co-insurance, paid by the participant, must be counted toward the annual cost-sharing limits (out-of-pocket maximums). However, plans are not required to count amounts paid for nonessential health benefits, services not covered by the plan, or services received from out-of-network providers.
- For plan years beginning in 2016, the self-only cost-sharing limit applies to each person regardless of whether they have self-only or family coverage. The FAQ provides the following example:
“Assume that a family of four individuals is enrolled in family coverage under a group health plan in 2016 with an aggregate annual limitation on cost sharing for all four enrollees of $13,000 (note that a plan is permitted to set an annual limitation below the maximum . . . aggregate $13,700 limitation for coverage other than self-only for 2016). Assume that individual #1 incurs claims associated with $10,000 in cost sharing, and that individuals #2, #3, and #4 each incur claims associated with $3,000 in cost sharing (in each case, absent the application of any annual limitation on cost sharing). In this case, because, under the clarification discussed above, the self-only maximum annual limitation on cost sharing ($6,850 in 2016) applies to each individual, cost sharing for individual #1 for 2016 is limited to $6,850, and the plan is required to bear the difference between the $10,000 in cost sharing for individual #1 and the maximum annual limitation for that individual, or $3,150. With respect to cost sharing incurred by all four individuals under the policy, the aggregate $15,850 ($6,850 + $3,000 + $3,000 + $3,000) in cost sharing that would otherwise be incurred by the four individuals together is limited to $13,000, the annual aggregate limitation under the plan, under the assumptions in this example, and the plan must bear the difference between the $15,850 and the $13,000 annual limitation, or $2,850.”
Note that the current ACA cost-sharing limits, and the changes for 2016, only affect plans with high out-of-pocket maximums. Many plans are not affected because they have out-of-pocket maximums that are much lower than the amounts allowed by the ACA, or because they already apply reasonable individual maximums for both single and family coverage plans. Group policies issued in certain states also may be subject to lower limits due to state insurance laws. Therefore, many plans may not be affected by the ACA changes for 2016. On the other hand, high deductible health plans (HDHPs) that are designed for compatibility with health savings accounts (HSAs), are likely to be affected by the changes.
HSA-Compatible High Deductible Health Plans
HDHPs that qualify as permissible coverage in connection with an HSA — called HSA-compatible HDHPs — must comply with IRS rules for minimum deductible amounts and maximum out-of-pocket amounts. Most HSA-compatible HDHPs are nongrandfathered health plans, so they are subject to the ACA cost-sharing limits or the IRS maximum out-of-pocket amounts, whichever is less.
For 2016, the maximum out-of-pocket amounts for a HSA-compatible HDHP will be:
- $6,550 if self-only coverage, or
- $13,100 if family coverage.
If, however, the 2016 HDHP is a nongrandfathered health plan, the maximum out-of-pocket amount foreach individual with family coverage will be limited to $6,850 with respect to in-network essential health benefits. For many HDHPs, this will be a significant change for 2016.
The guidance provided in FAQ XXVII does not affect grandfathered health plans or any plans for plan years before 2016. For nongrandfathered plans, including HSA-compatible HDHPs, employers and benefit advisors are encouraged to review the guidance to ensure compliance with the ACA cost-sharing limits for 2016.