Employee Benefits-DOL Issues FAQs about Affordable Care Act Implementation, Including Cost-Sharing Limits

The Department of Labor (the “DOL”), in conjunction with the Department of Health and Human Services and the Treasury (together, the “Departments”), has issued FAQs (Part XVIII) regarding implementation of the Affordable Care Act, including among other things guidance on the cost-sharing limits. Here is what the FAQs say on those limits:

In General. PHS Act section 2707(b), as added by the Affordable Care Act, provides that a non-grandfathered group health plan must ensure that any annual cost-sharing imposed under the plan does not exceed the limitations provided for under sections 1302(c)(1) and (c)(2) of the Affordable Care Act. Section 1302(c)(1) limits out-of-pocket costs and, for small group market plans, section 1302(c)(2) limits deductibles.

For plan years beginning in 2014, the annual limitation on out-of-pocket costs in effect under Affordable Care Act section 1302(c)(1) is $6,350 for self-only coverage and $12,700 for coverage other than self-only coverage. For later plan years, the annual limitation on out-of-pocket costs is increased by the premium adjustment percentage described under Affordable Care Act section 1302(c)(4).

After 2014. For plan years beginning after 2014, non-grandfathered group health plans must have an out-of-pocket maximum which limits overall out-of-pocket costs on all essential health benefits (“EHBs”). Because cost-sharing limits in section 1302(c) of the Affordable Care Act apply only to EHBs, plans are not required to apply the annual limitation on out-of-pocket maximums to benefits that are not EHBs. To determine which benefits are EHBs, the Departments will consider self-insured group health plans or large group health plans to have used a permissible definition of EHBs under section 1302(b) of the Affordable Care Act if the definition is one that is authorized by the Secretary of HHS.

Plan Structure. Plans are permitted to structure a benefit design using separate out-of-pocket limits, provided that the combined amount of any separate out-of-pocket limits applicable to all EHBs under the plan does not exceed the annual limitation on out-of-pocket maximums for that year under section 1302(c) of the Affordable Care Act.

Out-of-Network/Non-Covered Services. A plan may, but is not required to, count out-of-pocket spending for out-of-network items and services towards the plan’s annual maximum out-of-pocket limit. Similarly, a plan may, but is not required to, count out-of-pocket spending for non-covered services towards the plan’s annual maximum out-of-pocket costs.