ACA 2016 Maximum Out of Pocket Limit and CDH Plans


Recent guidance issued by the trilogy of Affordable Care Act (ACA) compliance and enforcement -Departments of Labor/Treasury/Health & Human Services – could have a major impact on many of the Consumer Driven Health Plans (CDHPs) currently in force, starting in 2016.  In short, the recently published guidance (released in the form of an FAQ) indicates that the annually published ACA out of pocket maximums affect so called “aggregate” family deductibles that are a part of many CDHP’s.  CDHP’s that utilize embedded family deductibles and grandfathered plans would not be impacted by the change.  Here’s what all of this means…

First, here’s an overview of the published out of pocket maximums for last, this, and next year, which is a key consumer protection inherent in the ACA:

·         2014: $6,350 individual/$12,700 family

·         2015: $6,600 individual/$13,200 family

·         2016: $$6,850 individual/$13,700 family

As a reminder, the ACA also requires all health plans (other than grandfathered/grandmothered plans) to apply/credit  copay, deductible, and coinsurance amounts paid by a covered member toward the plan’s out of pocket maximum.  Prior to this ACA provision, health insurance plans could continue to require copays to be paid by members, even if a plan’s published out of pocket MAXIMUM was met.  Once a plan’s out of pocket maximum is reached, health plans typically cover all eligible expenses, incurred by network providers, at 100% for the balance of the year.

Health insurance plans offering family level coverage (generally an individual plus at least one family member) typically structure the deductible for such coverage in one of two ways:

1.       Embedded: This format limits the amount of deductible exposure applicable to any covered plan member to the plan’s published INDIVIDUAL deductible.  E.g., a plan with a $1,500 individual/$3,000 family deductible would require only the $1,500 be met by an individual before the plan begins providing coverage.

2.       Aggregate: This format requires the published FAMILY deductible amount to be satisfied by one (or more) covered plan members before the plan begins providing coverage.  E.g., a plan with a $1,500 individual/$3,000 family deductible would require all covered individuals having family coverage to meet the full, $3,000 family deductible before the plan begins providing coverage.

With its recent interpretation and subsequent FAQ, the federal government has asserted that (non-grandfathered/grandmothered) plans deploying the aggregate deductible construct cannot require any single covered family member to incur out of pocket expenses which exceed the published 2016 individual limit of $6,850.  This interpretation results in a benefit improvement for affected plans, and is expected to have a premium rate impact of as much as 6%.

IMPORTANT:  Since the guidance issued from HHS (in the form of an FAQ) was more of an “interpretation” than a binding “regulation”, the aforementioned issue pertaining to individual deductible maximums may need a more affirmative pronouncement from the rest of the trilogy of ACA enforcement, including the Departments of Treasury and Labor.  It is widely expected that all three departments will reach agreement and issue more formal/binding guidance on the matter.  Until then, the window is slightly open to interpretation.