Questions from industry stakeholders have prompted the Obama administration to clarify annual limits on cost sharing under the ACA and how they apply to individuals, families, and self-funded and large group health plans.
Under the ACA non-grandfathered group health plans are required to ensure that any annual cost sharing imposed under the plan does not exceed certain limitations and an enrollees out-of-pocket costs for essential health benefits are limited.
For plan or policy years beginning in 2015, the maximum annual limitation on cost sharing under section is $6,600 for self-only coverage and $13,200 for coverage other than self-only coverage. For plan or policy years beginning in 2016, the maximum annual limitation on cost sharing is $6,850 for self-only coverage and $13,700 for other than self-only coverage.
The Department of Health and Human Services has previously clarified that the self-only maximum annual limitation on cost sharing applies to each individual, regardless of whether the individual is enrolled in self-only coverage or in coverage other than self-only. But the clarification prompted questions about its application to self-funded and large group health plans.
In an FAQ issued May 26, the DOL, HHS and Treasury, reiterated the clarification does apply to self-funded and large group health plans.
Accordingly, the self-only maximum annual limitation on cost sharing applies to an individual who is enrolled in family coverage or other coverage that is not self-only coverage under a group health plan, the administration says.
For example, the FAQ reads:
Assume that a family of four individuals is enrolled in family coverage under a group health plan in 2016 with an aggregate annual limitation on cost sharing for all four enrollees of $13,000 (note that a plan is permitted to set an annual limitation below the maximum established). Assume that individual No. 1 incurs claims associated with $10,000 in cost sharing, and that individuals No. 2, No. 3, and No. 4 each incur claims associated with $3,000 in cost sharing (in each case, absent the application of any annual limitation on cost sharing). In this case, because, under the clarification, the self-only maximum annual limitation on cost sharing ($6,850 in 2016) applies to each individual, cost sharing for individual No. 1 for 2016 is limited to $6,850, and the plan is required to bear the difference between the $10,000 in cost sharing for individual No. 1 and the maximum annual limitation for that individual, or $3,150. With respect to cost sharing incurred by all four individuals under the policy, the aggregate $15,850 ($6,850 + $3,000 + $3,000 + $3,000) in cost sharing that would otherwise be incurred by the four individuals together is limited to $13,000, the annual aggregate limitation under the plan, under the assumptions in this example, and the plan must bear the difference between the $15,850 and the $13,000 annual limitation, or $2,850.
The Departments will apply this clarification only for plan or policy years that begin in or after 2016, the FAQ says, adding that it also applies to non-grandfathered HDHPs.
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