Embedded Maximum Out of Pocket for
Large and Self-Funded Groups
Who: Family members with non-grandfathered HSA eligible Plans and high deductible health plans.
When: Effective for plan years beginning on or after January 1, 2016.
What: On May 26, 2015, Health & Human Services (HHS) and the Department of Defense (DOD) issued an Affordable Care Act (ACA) guidance that stated non-grandfathered large fully insured groups and all self-insured plans must implement a maximum cost sharing (including deductible, copayments, and coinsurance) for each family member of no more than the cost sharing limit for single coverage.
Executive Summary: Total health plan cost sharing is generally referred to as the “Maximum-out-of-Pocket” (MOOP). The MOOP includes potential member payments from deductibles, copayments, and coinsurance. The new MOOP guidance requires that cost sharing for an individual under family coverage cannot exceed the cost sharing for comparable self-only coverage. Having an individual MOOP for each family member under the total plan MOOP is referred to as an “Embedded Maximum-out-of-Pocket.”
Originally a February 27, 2015 HHS Notice related to embedded MOOP’s seemed to apply only to individual and small group plans offered through an Exchange. However, the new May 26, 2015 guidance expands that notice and even overrides the pre-ACA 2004 IRS guidance that allowed a unified family MOOP for HSA eligible plans and high deductible health plans.
Most HHS posting do not relate to self-insured plans, so it is possible that additional clarifications and changes may come in future updates. But for now, Embedded MOOP limits appear to be mandated.
Actions: HR and Benefit managers should immediately contact their insurer and/or third party administrator (TPA) to begin the process of changing their plan design, as needed. Brokers and consultants should inform their clients of the change in MOOP rules especially if they are self-insured employers, who may not closely follow HHS announcements. The cost of insurance is likely to increase under this guidance so, insurers and/or actuarial firms should be contacted to estimate the cost implications of the benefit change. 2016 enrollment information should be developed to clearly inform plan members of this significant change to coverage.
The information presented and contained within this article was submitted by Ronald E. Bachman, President & CEO of Healthcare Visions and Chairman of the IHC Editorial Advisory Board. This information is general information only, and does not, and is not intended to constitute legal advice. You should consult legal advisors to determine the laws and regulations applicable to your company. Any opinions expressed within this document are solely the opinion of the individual author.