In early April, President Obama signed the Protecting Access to Medicare Act, which repeals a troubling provision of the Affordable Care Act (ACA) for small group market health plans. This law has an indirect, but positive effect on account-based plans for small employers.
Specifically, §213 of the new law eliminates deductible limits imposed under the ACA for small group markets. These limits are contained in §1302(c)(2) of the ACA. For plan years starting in 2014, deductibles could not exceed $2,000 for self-only coverage and $4,000 for family coverage. These limits do not apply to large group market plans or self-insured plans, according to DOL FAQ Part XII.
The effective date of the repeal is retroactive to when the ACA was first enacted in 2010.
This represents a triumph for small employers who use account-based plans (e.g., Health FSAs, HRAs and HSAs) to soften the blow from purchasing medical plans with high deductibles because they are more affordable. For example, before 2014, a small employer might purchase a medical plan with a $4,000/$8,000 deductible that could be partially offset by an HRA that can be used for deductible expenses. The practical effect of this plan design is that it reduces overall insurance expenditures and increases consumerism and cost transparency. With the enactment of the new law, this plan design strategy may continue.
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