The Department of Health and Human Services (HHS) has announced the 2017 out-of-pocket maximums applicable to self-funded and fully insured employer health plans. The maximums for 2017 have been set as follows:
- Individual coverage: $7,150
- Family coverage: $14,300
All non-grandfathered health benefit plans in effect on or after January 1, 2014 are required to comply with the Affordable Care Act’s (ACA) mandate that employer health plans’ annual in-network out-of-pocket maximums not exceed HHS’ established limits. The 2017 limits represent an increase from the current 2016 maximums of $6,850 for individual coverage (an increase of $300), and $13,700 for family coverage (an increase of $600).
The out-of-pocket limits represent the maximum amount that an enrollee must pay for covered essential health benefits through cost-sharing. It typically includes the annual deductible as well as any cost-sharing obligations the enrollee must meet after the deductible has been satisfied. The out-of-pocket maximum does not include premiums, cost sharing associated with of out-of-network services, or the cost of nonessential health benefits.
According to a recent study by United Benefits Advisors (UBA), out-of-pocket costs have increased significantly over the past decade, although median plan limits have remained below HHS’ out-of-pocket maximums. According to UBA, both individual and family coverage plans saw significant increases in median in-network plan out-of-pocket maximums in 2015. It is expected that out-of-network expenses will continue to increase significantly as well, as employers continue to widen the cost-share gap between employer and employee responsibilities.
For solutions to help mitigate employee health benefit plan costs that don’t simply shift costs to valued employees, contact the benefits experts at POMCO today.
One of the primary goals of the Affordable Care Act (ACA) was to improve access to affordable health care for all Americans. As a strategy to achieve this goal, the Federal Government acknowledged that it would be necessary to educate Americans on the health coverage plan options available to them in order to enable them to choose the plan option that best suits their needs and the needs of their dependents. To this end, in 2012, the ACA implemented the summary of benefits and coverage (SBC) mandate, which required all health plans to make available a document that would help individuals eligible to enroll in coverage to understand and compare available health coverage options. Each SBC is required to include the uniform glossary, a government-issued list of commonly used health care terms and definitions.
SBCs must be provided by all health plans and insurance carriers in a standard format as defined by the ACA, and may only be different based on the specific benefits offered by the plan. Recently, the Department of Health and Human Services (HHS), the Department of Labor (DOL), and the Department of the Treasury (collectively, The Departments) have issued final regulations regarding the SBC and uniform glossary that clarify the original regulations. Key among the clarified regulations are the following provisions:
Provision to Require Online Access to Plan or Policy Information
The final regulations clarify that issuers must include an Internet web address where a copy of the master plan document or individual coverage policy can be reviewed and obtained. The final regulations require these documents to be easily available to individuals, plan sponsors, and participants and beneficiaries shopping for coverage prior to submitting an application for coverage. The final regulations also clarify that all plans and issuers must include in the SBC contact information for questions.
Provisions to Reduce Unnecessary Duplication
The final regulations help to prevent unnecessary duplication of materials. The 2012 regulations stated that if either the plan administrator or the insurance carrier or third party administrator (TPA) provides the SBC to a participant or beneficiary in accordance with the timing and content requirements, both will have satisfied their SBC obligations. The final regulations apply this same rule in the following situations:
- A group health plan has a binding contractual arrangement where another party assumes responsibility to provide the SBC
- A group health plan uses two or more insurance products provided by separate issuers to insure benefits with respect to a single group health plan
- An SBC for student health insurance coverage is provided by another party (such as an institution of higher education).
Provision Regarding Formatting and Content Changes
The original ACA regulations limited the SBC to four double-sided pages. Since then however, some plans have expressed concern regarding the ability to include all required information in this amount of space. The final regulations clarified that the new template and associated documents that will be released will address specific issues related to formatting all of the required information into the four-page, double-sided template.
For group health plans, the final regulations generally apply to coverage that begins on or after September 1, 2015.
Please be advised that the SBC’s are not a substitute for a complete listing of benefits which are found in the Summary Plan Documents.
Six years after the Affordable Care Act (ACA) was passed into law, employers are still addressing ACA requirements by modifying their benefit plan to meet pending mandates. Employers preparing for the 2016 benefit plan year should take into consideration their health plan’s out-of-pocket maximums. The ACA requires that health benefit plans limit the annual maximum cost sharing imposed on plan enrollees for out-of-pocket costs associated with essential health benefits. For plan years beginning in 2016, the maximum out-of-pocket cost limits will be:
- $6,850 for individual coverage
- $13,700 for family (or all forms of non-self-only) coverage
On February 27, 2015, The Department of Health and Human Service (HHS) mandated that the $6,850 maximum limit on individual coverage will apply to each individual irrespective of whether that individual is enrolled in self-only coverage or family coverage. Based on this requirement, an enrollee with family coverage would not be subject to cost-sharing for costs associated with covered benefits if one of two scenarios has been met:
- The enrollee and his/her enrolled dependents have reached a combined out-of-pocket limit of $13,700. Under this scenario, no members of the family would be subject to cost-sharing for covered benefits in the future.
- Any one of the family members reaches the embedded individual coverage maximum of $6,850. Under this scenario, only the member of the family that reached the $6,850 individual limit would not be subject to cost-sharing for covered benefits in the future.
On May 26,2015 it was clarified by HHS and The Department of Labor (DOL) that this mandate applies to all health plans, including non-grandfathered plans, large and small group plans, high-deductible health plans (HDHP), and plans that are both fully insured and self-funded.
Employers implementing this rule within their HDHP should take special care to clearly communicate this change to their plan members. The embedded out-of-pocket maximum requirement may cause confusion for HDHP members since the ACA maximum out-of-pocket limit is not the same as the maximum out-of-pocket limit established by the Internal Revenue Service (IRS) on HDHPs. In 2016, HDHP dollar limits are only $6,550 for individual coverage and $13,100 for family coverage. Therefore, for members enrolled in individual coverage in 2016 in an HDHP plan their maximum out-of-pocket limit for a particular individual will be $6,550 while the limit for individuals enrolled in family coverage in 2016 in an HDHP will be $6,850. These family plan members will also be subject to an earlier limit if the individual’s aggregate family out-of-pocket costs exceed the $13,100 family coverage limit.
Employers that currently do not have an embedded out-of-pocket maximum should begin working with their benefit plan administrator and broker now to make necessary plan changes and to build a member communication strategy, to be prepared for the changes to go into effect in 2016.
The Obama administration recently announced that same-sex married couples can now qualify for Medicare hospital and physician benefits. The decision is the newest response to the June 26, 2013 Supreme Court ruling in U.S. v. Windsor, which held section three of the Defense of Marriage Act (DOMA) unconstitutional. Due to the June 2013 ruling, the Centers for Medicare & Medicaid Servies (CMS) must recognize same-sex marriages for determining entitlement to, or eligibility, for Medicare.
This decision will allow the Social Security Administration (SSA) to determine the eligibility of married same-sex Medicare applicants. Then U.S. Health and Human Services (HHS) Secretary Kathleen Sebelius stated that the SSA and HHS are working to process Medicare application requests by same-sex couples “in a timely manner to ensure all beneficiaries, regardless of sexual orientation, are treated fairly.”
Both same-sex couples and surviving spouses of same-sex marriages are being encouraged to submit applications for Medicare Part A and Part B during this special enrollment period. Requests for reductions in Part B and premium Part A late enrollment penalties for certain eligible people in same-sex marriages are also being considered at this time.
For employers of self-funded or fully-insured health benefit plans in New York or other states that recognize same-sex legal spouses as eligible health plan dependents, be aware of obtaining updated coordination of benefit (COB) detail for those plan members in same-sex marriages who may be applying for Medicare at this time. To ensure that your plan is not paying primary for any claims for which Medicare should be primary, be sure that your benefits administrator or insurance carrier is properly coordinating claims payments with Medicare and that you have updated COB detail on-file.
The U.S. Department of Health and Human Services (HHS) announced an extension to the deadline for individual consumers to complete commercial coverage applications in those states where the federal government is managing the public health benefit marketplaces. States that defaulted to allowing the federal government to run the marketplaces in its state include Alabama, Alaska, Arizona, Florida, Georgia, Indiana, Kansas, Louisiana, Maine, Missouri, Mississippi, Montana, Nebraska, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Wisconsin and Wyoming.
The extension does not apply to small-group coverage on the SHOP exchange.HHS and the Centers for Medicare and Medicaid Service (CMS) created a special enrollment period for consumers who started the individual plan application process by March 31 but did not complete the process by that date. A check box was added to HealthCare.gov for consumers to request an application extension up through the middle of April 2014. The original limited enrollment period which began on October 1, 2013 and was originally scheduled to end on March 31, 2014, was created to discourage consumers from waiting until they required serious medical care to enroll in the Health Benefit Exchange Marketplace. HHS’ goal was to limit the amount of adverse selection among the pool of enrollees by setting a deadline for both the healthy and the unhealthy to obtain coverage.
HHS relayed to consumers the need to self-report whether or not they had actually begun the application prior to March 31, as HHS was not able to verify a consumer’s application status through the online portal. If a consumer wants to apply for an extension after mid-April, they will have to provide evidence to HHS to validate that they qualify for a special enrollment period. Examples of qualifying events include such factors as marriage, or the loss of a job. Individuals can also meet extension criteria if they can prove that they qualify for a hardship exemption. In most states, individuals who did not enroll by March 31, or apply for an extension by mid-April, must wait until the next open enrollment period begins on November 15.
This extension should have minimal impact on self-funded benefit plans. For employers with employees who opted-out of the employer health plan in order to enroll in a plan on the exchange marketplace, those employees may be looking to the employer’s open enrollment period to obtain coverage if they missed the marketplace enrollment deadline and are not eligible for an extension.
In December 2013, the Department of Health and Human Services (HHS) issued proposed regulations addressing the Transitional Reinsurance Fee established under the Affordable Care Act (ACA). The Transitional Reinsurance Fee was established to fund a temporary reinsurance program to help stabilize insurance premiums in the individual market (both inside and outside of the Health Benefit Exchanges) against the impact of covering individuals with high claims costs.
The fee will be imposed on insurers and employers over three years: 2014, 2015, and 2016. The mandate intends to collect $10 billion in 2014, $6 billion in 2015 and$4 billion for 2016. The fees are due in the year following the benefit year. The annual per capita contribution rate for 2014 is $63 per year per covered life. The proposed regulations released in December, announced an annual per capita contribution rate of $44 for 2015.
The fees will be divided among the reinsurance fund, the U.S. Treasury, and administrative expenses. HHS has therefore proposed an allowance for contributing entities to pay the annual fee in two installments: the first for reinsurance payments and administrative expenses, and the second for the U.S. Treasury. Under the proposed reinsurance fee schedule, a contributing entity would submit the number of covered lives by November 15 of the benefit year and then issue two payments. First, HHS would notify the covered entity of the fee amount allocated to reinsurance payments and administrative expenses for the benefit year. Contributing entities would be notified by December, and the payment would be due within 30 days. Second, in the fourth quarter of the year after the benefit year, HHS would notify the contributing entity of the contribution amount allocated for payments to the U.S. Treasury. This installment would also be due within 30 days following the notification.
The rules proposed by HHS include audit compliance standards. The proposed targeted audits would be based on information HHS receives through the annual enrollment count, any history of non-compliance and other criteria. The audits may also look to identify entities that should have paid the fees but did not.
The proposed regulations included an exemption from the fee for self-insured, self-administered plans effective for the 2015 benefit year. Self-insured group health plans that do not use a third-party administrator for claims processing or adjudication, or for processing and communicating enrollment information, would therefore be exempt. While very few large employer plans are self-insured and self-administered, the proposal may exempt some collectively bargained multi-employer plans that meet those requirements.
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