Informal guidance from the Department of Labor (“DOL”) and the Department of Health and Human Services (“HHS”) (the Departments) has called into question a common practice of high deductible health plans regarding how out of pocket maximums are applied.
Generally, where a high deductible health plan offers self and family coverage, the out of pocket maximum for self-only coverage is not applied for individuals who are enrolled in family coverage. For example, if the self-only coverage out of pocket maximum is $6,000, and the family maximum is $12,000, the plan would not pay at 100% until the family maximum is met, even if that means all of the costs are attributable to one individual. This plan design is expressly permitted by the Internal Revenue Service in its guidance for health savings accounts (HSAs) and high deductible health plans.
DOL and HHS are now saying informally that typical plan design is no longer permitted by the Affordable Care Act (“ACA”) –i.e., the maximum self-only limit for HSAs and high deductible health plans must be applied to individuals enrolled in family plans. This is known as the so called “embedded” maximum out of pocket (“MOOP”) rule. The Departments are also indicating that the change is effective for plan years beginning on or after January 1, 2016.
There is some possibility that the agencies will issue more clarifying guidance, but in the absence of such guidance plan sponsors should carefully evaluate the risks of retaining their
current plan design.
This Benefits Brief provides background regarding the cost-sharing provisions under the ACA and summarizes the recent guidance on cost-sharing issued by the Departments. Finally, it
clarifies the applicability of the embedded MOOP to large group and self-funded group health plans.
Read the full report here.
Contact Steven G. Cosby, MHSA, Group Health Insurance Broker and Agent with Cosby Insurance Group, with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.