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Plan sponsors should forge ahead, despite an uncertain regulatory future
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updated May 5, 2017
U.S. Department of Health and Human Services (HHS), in one of the Obama administration's closing health care-related actions, has finalized the 2018 out-of-pocket (OOP) maximums for health care coverage. The 2018 limits will be $7,350 for self-only coverage (up from the 2017 cap of $7,150) and $14,700 for family/other than self-only coverage (up from $14,300).
The Affordable Care Act (ACA) imposes annual OOP maximums on the amounts that enrollees in
nongrandfathered health plans—whether fully insured or self-funded, in the small- or large-group markets—can be required to pay for covered
essential health benefits through cost-sharing.
On Dec. 22, 2016, HHS published in the
Federal Register its annual
Notice of Benefit and Payment Parameters for 2018.
Health Plan Out-of-Pocket Maximums
The OOP maximum includes the yearly deductible and any cost-sharing obligations enrollees have after the deductible is met, such as co-payments and co-insurance. 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.
Will the OOP Limits Be Repealed in 2017?
"While it is anticipated that Congress will pass, and President-elect [Donald] Trump will sign, legislation to repeal certain provisions of the ACA starting as soon as 2017, it is unlikely that the ACA OOP limits will be one of those provisions," according to Kimberly Mitchell and Richard Stover, consultants with Xerox HR Services in New York City. "The reconciliation process that Congress is planning to use for ACA repeal can only be used to repeal ACA provisions that have a direct budgetary impact. The OOP limits likely do not meet that requirement,"
they posted on the consultancy's website.
Whatever the ultimate fate of the ACA might be, "you have to follow the rules as they are and make the deadlines that are currently in play," unless and until the law and regulations are changed, advised Erin Sweeney, an attorney in the Washington, D.C., office of Miller & Chevalier.
If the Republicans were able to pass a comprehensive ACA replacement plan that revised or repealed health plan OOP maximums, it "may not come into effect until 2019, because the insurance market's trajectory is pretty long, requiring pricing projections and coverage estimates to be calculated far in advance," Sweeney said.
[SHRM members-only toolkit: Managing Health Care Costs]
HHS Maximums Exceed Limits in Most Plans
Out-of-pocket costs have risen sharply over the past decade, but, according to the results of the
2016 United Benefits Advisors Health Plan Survey of employer-provided plans, typical plan limits are still below the HHS' OOP caps. The survey report, released in October and based on responses from 11,524 employers nationwide, revealed that, across all plan types, both singles and families saw continued increases in median in-network OOP plan maximums (up $440 and $300, respectively, to $4,400 and $9,000) but that those amounts were still well below the HHS allowable limits.
For high-deductible, consumer-directed health plans, the survey found that:
'Embedded' OOPs Still in Place
Starting in 2016, federal regulations required nongrandfathered health plans, whether self-funded or fully insured,
to 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.
For instance, if a plan has an 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.
It's unclear whether the Trump administration will seek to repeal the regulations that required embedding of the OOP maximum.
Separate OOP Maximums for High-Deductible Plans with HSAs
Not confusing enough? Consider that distinct from the ACA's annual out-of-pocket maximums for nongrandfathered health plans, set by the department of Health and Human Services as discussed above, are the annual OOP maximums that the Internal Revenue Service issues specifically for high-deductible health plans (HDHPs) that can be linked with health savings accounts (HSAs).
For example, in 2017, while the ACA's OOP maximum is $7,150 for self-only coverage and $14,300 for family coverage, the IRS has issued HSA-compatible HDHP OOP maximums of $6,650 for self-only coverage and $13,100 for family coverage (see the
SHRM Online article
IRS Issues 2017 HSA Contribution Limits).
For 2018, while the ACA's OOP maximum is $7,350 for self-only coverage and $14,700 for family coverage, the IRS has issued HSA-compatible HDHP OOP maximums of $6,650 for self-only coverage and $13,300 for family coverage (see the
SHRM Online article
IRS Sets 2018 HSA Contribution Limits).
The IRS is expected to issued 2019 OOP maximums for HDHP/HSA plans in the second quarter of 2018. Employers that offer these plans should ensure that they meet the IRS's lower OOP maximums.
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