Guidance on out-of-pocket spending issued by the Departments of Labor, Health and Human Services, and the Treasury will make health plans more expensive for employers.
The Affordable Care Act places annual limits on employees’ out-of-pocket expenses for certain “essential health benefits.” For plan years beginning in 2016, limits equal $6,850 for self-only coverage and $13,700 for other than self-only coverage. Out-of-pocket expenses include deductibles, copayments and other expenses plan members must pay themselves before the plan will pay benefits. Limits apply to all non-grandfathered group health plans, including self-insured plans.
Earlier this year, HHS clarified that self-only out-of-pocket limits apply to each individual, regardless of whether he or she is enrolled in self-only coverage or in self-plus-spouse or family coverage. Under this rule, after a family member’s costs for essential health benefits exceeds the out-of-pocket limit for self-only coverage, the plan must pay all covered expenses for that individual for the rest of the policy year. This applies even if total costs for all family members have not reached the family coverage out-of-pocket limit. This will likely increase employers’ coverage costs.
Three Congressional representatives—Reps. Paul Ryan, R-Wis., John Kline, R-Minn., and Fred Upton, R-Mich., are challenging the HHS on this clarification. “[T]he relevant statute is clear — these are two distinct and separate limits,” they said in a letter to U.S. Health and Human Services Secretary Sylvia Burwell.
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