The Affordable Care Act has made significant changes to group health plans since it was enacted in 2010. Many of these key reforms became effective in 2014 and 2015, including health plan design changes, increased wellness program incentives and employer shared responsibility penalties.
Changes to some ACA requirements, such as increased dollar limits, take effect in 2019 for employers sponsoring group health plans. To prepare for 2019, employers should review upcoming requirements and develop a compliance strategy.
This article provides an overview of cost-sharing limits applicable to non-grandfathered plans.
Cost-sharing LimitsEffective for plan years beginning on or after Jan. 1, 2014, non-grandfathered health plans are subject to limits on cost sharing for essential health benefits. The ACA’s overall annual limit on cost sharing (also known as an out-of-pocket maximum) applies for all non-grandfathered group health plans, whether insured or self-insured. Under the ACA, a health plan’s out-of-pocket maximum for EHB may not exceed $7,900 for self-only coverage and $15,800 for family coverage, effective for plan years beginning on or after Jan. 1, 2019.
Health plans with more than one service provider may divide the out-of-pocket maximum across multiple categories of benefits, rather than reconciling claims across multiple service providers. Thus, health plans and insurance issuers may structure a benefit design using separate out-of-pocket maximums for EHB, provided that the combined amount does not exceed the annual out-of-pocket maximum limit for that year. For example, in 2019, a health plan’s self-only coverage may have an out-of-pocket maximum of $6,000 for major medical coverage and $1,900 for pharmaceutical coverage, for a combined out-of-pocket maximum of $7,900.
Beginning with the 2016 plan year, the self-only annual limit on cost sharing applies to each individual, regardless of whether the individual is enrolled in self-only coverage or family coverage. This embeds an individual out-of-pocket maximum in family coverage so that an individual’s cost sharing for EHBs cannot exceed the ACA’s out-of-pocket maximum for self-only coverage.
Note that the ACA’s cost-sharing limit is higher than the out-of-pocket maximum for high deductible health plans. In order for a health plan to qualify as an HDHP, the plan must comply with the lower out-of-pocket maximum limit for HDHPs. The U.S. Department of Health and Human Services provided FAQ guidance on how this ACA rule affects HDHPs with family deductibles that are higher than the ACA’s cost-sharing limit for self-only coverage.
According to HHS, an HDHP that has a $10,000 family deductible must apply the annual limitation on cost sharing for self-only coverage ($7,350 in 2018) to each individual in the plan, even if this amount is below the $10,000 family deductible limit. Because the $7,350 self-only maximum limitation on cost sharing exceeds the 2018 minimum annual deductible amount for HDHPs ($2,700), it will not cause a plan to fail to satisfy the requirements for a family HDHP.
CHECKLIST: Check your plan’s cost-sharing limits
- Review your plan’s out-of-pocket maximum to make sure it complies with the ACA’s limits for the 2019 plan year ($7,900 for self-only coverage and $15,800 for family coverage).
- If you have an HSA-compatible HDHP, keep in mind that your plan’s out-of-pocket maximum must be lower than the ACA’s limit. For 2019, the out-of-pocket maximum limit for HDHPs is $6,750 for self-only coverage and $13,500 for family coverage.
- If your plan uses multiple service providers to administer benefits, confirm that the plan will coordinate all claims for EHBs across the plan’s service providers or will divide the out-of-pocket maximum across the categories of benefits, with a combined limit that does not exceed the maximum for 2019.
- Confirm that the plan applies the self-only maximum to each individual in the plan, regardless of whether the individual is enrolled in self-only coverage or family coverage.
This summary is a high-level overview of the ACA’s limits on cost sharing. It does not provide an in-depth analysis specific to your organization. If you have any questions or would like to begin talking to an employee benefits consultant, please get in touch by email or by calling (855) 882-9177.