Recent regulatory guidance sets the 2016 out-of-pocket (OOP) maximum applicable to Essential Health Benefits (EHBs). Effective for plan years on or after January 1, 2016, the maximum OOP limit cannot exceed $6,850 for self-only coverage and $13,700 for other than self-only coverage (family coverage).
Importantly, the self-only OOP maximum will apply to each individual, regardless of whether the individual is enrolled in single or family coverage. This significant update impacts family deductibles. Employers applying only an aggregate OOP limit for family coverage for EHBs may need to adjust plan designs to include an embedded individual OOP limit for all covered individuals.
As of plan years on or after January 1, 2014, the Affordable Care Act (ACA) requires all non-grandfathered Group Health Plans limit annual out-of-pocket (OOP) maximums on EHBs for plan enrollees. The OOP maximum includes deductibles, co-insurance and co-payments toward EHBs under the plan. The maximum OOP expense limits are adjusted annually for increases in the cost of living.
Embedded Individual Limit
The Department of Health and Human Services (HHS) guidance clarifies that plans offering family coverage (or any plan other than self-only coverage) are required to include an embedded OOP limit for each individual covered. EXAMPLE: If an other than self-only plan has an annual limitation on cost-sharing of $10,000 and one individual covered under the family plan incurs $20,000 in expenses, that particular individual is only responsible for paying the annual limit on cost-sharing for self-only coverage, which is $6,850 in 2016.
Health Savings Accounts (HSAs) frequently apply a single family deductible and a family OOP maximum on Essential Health Benefits. Following this regulatory guidance, this plan design is no longer permissible, presuming the family deductible and OOP are greater than the ACA maximum for a self-only OOP, which is $6,850 in 2016. High deductible health plans will need to include an embedded self-only deductible / OOP maximum on EHBs to be in compliance in 2016.
Expanded Inpatient Hospital Services
Recent regulatory guidance also includes coverage for inpatient hospital services, as included within the ACA Minimum Value requirements. If an employer offers a plan limiting inpatient hospital services and coverage, plan design changes must be considered to comply with the new regulations, effective January 1, 2016.
For those employers applying only an aggregate OOP limit for family coverage for EHBs, plan design adjustments to include an embedded individual OOP limit for all covered individuals should be considered. Oswald Companies will continue to provide timely updates and concise information, as further ACA implementation guidance is issued.
Click HERE for the Oswald Advisory summarizing this notice.
Oswald Companies | Health Care Reform 2015
Andrea Esselstein, J.D. | firstname.lastname@example.org; 216.658.5012
Disclaimer: Materials are solely for informational purposes as an educational resource. Please contact counsel to obtain advice with respect to any specific issue.