FAQs about the ACA: Out-of-pockets and preventative care

The U.S. Department of Labor FAQ XIX provided model notices for COBRA and, unfortunately, not everyone looked beyond that part to see that some other issues were addressed within. Specifically, the DOL addressed the new rules applicable to out-of-pocket limits and the preventive services requirement. So let’s look back at that notice and see what else was provided beyond links to the model COBRA notices.

First, with respect to out-of-pocket limits, the limits for 2014 are $5,350 for individuals and $12,700 for family. Those limits go up in 2015 to $6,600 and $13,200 respectively. The FAQs clarify that plan sponsors may have separate out-of-pocket limits on different categories of benefits, like medical and prescription drugs, as long as the combined amount of all such limits does not exceed the allowed amount. Also, the out-of-pocket limit applies to in-network expenses only and although it is not required to do so, a plan may place a limit on out-of-network expenses.

With respect to non-covered items, this FAQ clarifies that the costs of non-covered items are not part of the computation. So if an item or service is not covered by the plan, the plan does not have to include the cost of that service or item when doing the annual limits calculation. Finally, it is important to note that for prescription drugs, the plan does not have to count the amount paid by the participant for a brand name drug toward the annual limit when a generic drug is available (provided it is a medically appropriate substitute).

With respect to preventative services, for plan years beginning on or after Sept. 24, 2014, group health plans must cover breast cancer risk-reducing medications, such as tamoxifen or raloxifene without cost sharing (which means no cost to the participant in most cases). Also, since the Affordable Care Act requires a group health plan or health insurance issuer to cover tobacco use counseling and interventions, the FAQs provide a “safe harbor” if the plan provides (a) screening for tobacco use; and, (b) for those who use tobacco products, at least two tobacco cessation attempts per year. These have to be provided without cost as preventative care.

So for plan sponsors that paid attention to the change in the COBRA notices, go back and review this FAQ again to make sure the other issues addressed are incorporated into an ACA compliance package. 

Keith R. McMurdy is a partner with Fox Rothschild focusing on labor and employment issues; he can be reached at kmcmurdy@foxrothschild.com or (212) 878-7919.

The information in this legal alert is for educational purposes only and should not be taken as specific legal advice.