2016 Out-of-Pocket Limits for Health Plans

Background

Beginning in 2014, the Affordable Care Act (ACA) requires certain health plans to comply with cost-sharing limits with respect to their coverage of essential health benefits. Under the ACA, “essential health benefits” (EHB) must be equal in scope to benefits covered by a typical employer plan and must include items and services in ten general categories, including hospitalization, prescription drugs and maternity and newborn care. The cost-sharing limits include an overall annual limit (or an out-of-pocket maximum) and an annual deductible limit. On Feb. 25, 2013, the Department of Health and Human Services (HHS) issued a final rule on EHB that addresses the ACA’s cost-sharing limits for health plans. The limits are effective for plan years beginning in 2014.

2016 Limits

On Feb. 27, 2015, HHS published its 2016 Notice of Benefit and Payment Parameters Final Rule, which established the annual limit on total enrollee cost-sharing for EHB. Under the final rule, the out-of-pocket maximum increased for 2016 to $6,850 for self-only coverage and $13,700 for family coverage.

Clarification for Family Coverage—Embedded Out-of-pocket Maximum

The 2016 Notice of Benefit and Payment Parameters Final Rule clarifies that the self-only annual limit on cost-sharing applies to each individual, regardless of whether the individual is enrolled in self-only coverage or family coverage. This guidance embeds an individual out-of-pocket maximum in family coverage so that an individual’s cost-sharing for essential health benefits cannot exceed the ACA’s out-of-pocket maximum for self-only coverage. Note that the ACA’s cost-sharing limit is higher than the out-of-pocket maximum for HDHPs. In order for a health plan to qualify as an HDHP, the plan must comply with the lower out-of-pocket maximum limit for HDHPs. In an FAQ, HHS provides guidance on how this ACA rule affects HDHPs with family deductibles that are higher than the ACA’s cost-sharing limit for self-only coverage. The FAQ indicates that this policy will become effective with the 2016 plan year, when the self-only limit on cost-sharing increases to $6,850.

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The information provided is for informational purposes only and does not constitute legal advice. The information above contains only a summary of the applicable legal provisions and does not purport to cover every aspect of any particular law, regulation or requirement. Depending on the specific facts of any situation, there may be additional or different requirements. This is to be used only as a guide and not as a definitive description of your compliance obligations.