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Despite greater cost-shifting, most employer health plans have out-of-pocket caps below the allowable limits
The Department of Health and Human Services (HHS) has proposed 2017 health plan
out-of-pocket (OOP) maximums of $7,150 for self-only coverage and $14,300 for family (other than self-only) coverage.
The Affordable Care Act (ACA) imposes annual OOP maximums on the amount that an enrollee in a nongrandfathered health plan—including self-insured and large-group health plans—must pay for covered
essential health benefits through cost-sharing.
Source: Department of Health and Human Services
The OOP maximum includes the yearly deductible and any cost-sharing obligations enrollees have after the deductible is met. It does not count premiums, billing amounts for out-of-network cost-sharing or spending for nonessential health benefits, and OOP maximums do not apply to grandfathered or retiree-only plans.
On Dec. 2, 2015, HHS published in the
Federal Register its
proposed Notice of Benefit and Payment Parameters for 2017, which includes OOP maximum rates, and released
a fact sheet that summarized the guidance. A final rule will be forthcoming (the
2016 HHS final rule on benefit and payment parameters was issued at the end of February 2015).
Out-of-pocket costs have risen sharply over the past decade, according to findings released in November 2015 from the
2015 United Benefits Advisors (UBA) Health Plan Survey, although median plan limits remain well below the HHS’s OOP caps. The UBA survey showed that both self-only and family coverage had large increases in median in-network plan OOP maximums in 2015:
• For self-only coverage, in-network OOP maximums rose to $4,000 (up $500 from 2014).
• For family coverage, in-network OOP maximums rose to $8,700 (up $700).
Families bore the brunt of the increase in median out-of-network, out-of-pocket plan maximums, rising from $16,000 in 2014 to $18,000 in 2015, while self-only out-of-network OOP limits increased from $8,000 to $9,000.
“If we only look at slices of the health insurance market [such as plan premiums], it might appear that costs have remained relatively steady. A closer look at how much of the cost has been shifted to employees, however, reveals a much different story,” said Les McPhearson, CEO of UBA, in a statement.
“Out-of-network expenses are not subject to [ACA] limitations, which means they’ll likely continue to increase significantly as employers continue to shift a greater share of expenses to employees through out-of-pocket cost increases and reductions in family benefits,” he predicted.
Embedded OOPs for 2016
Beginning in 2016, nongrandfathered health plans, whether self-funded or fully insured, must apply an embedded OOP maximum to each individual enrolled in family coverage if the plan’s family OOP maximum exceeds the ACA’s OOP limit for self-only coverage ($6,850 for 2016).
This change, announced in
guidance issued in May 2015 by the departments of Labor and Treasury, along with HHS, affects the design of many employer-sponsored plans—in particular, high-deductible health plans that had commonly imposed a single overall family OOP limit on family coverage without an underlying self-only OOP maximum for each covered family member.
For instance, if a plan has a OOP cap of $6,000 for individuals and $12,000 for families, an employee who is part of a family plan and incurs out-of-pocket expenses for herself that amount to more than $6,000 during the year still won’t pay more than $6,000 (assuming her health providers are in-network). But her family members who each incur expenses of less than $6,000 per year would be subject, when their expenses are combined, to the $12,000 family OOP limit.
“The new cost-sharing limit shifts medical costs to employers for individuals who have not reached, and might never reach, the umbrella limit,” commented Annette Guarisco Fildes president and CEO of the ERISA Industry Committee, which advocates on behalf of large employers. “The departments’ new cost-sharing limit will have significant and adverse effects on large group health plans,” she warned.
“Even though the new regulation sounds friendly to families on its face, in fact it makes already-expensive family coverage even less affordable, since family premiums are likely to increase substantially with this new rule in place,” said Leah Binder, president and CEO of The Leapfrog Group, a Washington, D.C.-based nonprofit that rates hospital quality and safety.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Follow me on Twitter.
Related SHRM Article:
Family Plans Must ‘Embed’ Out-of-Pocket Limits in 2016,
SHRM Online Benefits, June 2015
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