HHS Announces 2017 Out-of-Pocket Maximums

Money and gavelThe 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.


A CFO’s Guide to Making Benefit Plan Determinations

What Questions Should You be Asking?

Simplifying AdministrationEmployee benefits are one of the most significant bottom line costs for any organization. Chief financial officers play an essential role in determining what benefit plan solutions not only fit into the organization’s budget, but have the potential for the greatest cost savings. As you plan for the coming year’s expenses and work with your human resources director and benefits consultant to determine the right employee benefit solutions for your employees, ask the following questions:

Is our current health benefit plan at risk for the Affordable Care Act’s (ACA) Cadillac Tax?

The Cadillac Tax is a 40 percent excise tax on employer-sponsored health plans with annual premiums in excess of $10,200 for individual coverage, and $27,500 for family coverage. The mandate is set to go into effect in 2018¹, leaving employers only two full calendar years to make plan changes in order to avoid the tax. For organizations that are collectively bargained in particular, it may be necessary to begin negotiations and planning now, in order to avoid the tax in 2018. To mitigate the risk of the tax, some employers are choosing to restructure benefits, move to narrow networks, or offer a high-deductible health plan (HDHP) in order to reduce overall plan costs and health plan value.

What is the cost of our spousal coverage?

According to BenefitsPro, the average cost of providing health care for a family was $16,351 in 2013, a 4 percent increase from the year prior, and employees paid, on average, only $4,565 of that total. As part of a trend to not only reduce overall health care costs, but also as a strategy to further avoid Cadillac Tax implications, a growing number of employers are restricting spousal benefit coverage by implementing a working spouse rule. The rule stipulates that if the spouse of an employee has access to primary health care through his/her own employer, and the employer pays for a designated portion of the single coverage cost, the spouse is not eligible for coverage under your plan. As an alternative, some employers are allowing spouses to remain covered, but are adding a surcharge to the cost for the employee. CFOs should weigh the cost benefits of a working spouse rule against how such a significant change may be viewed by employees. Though bottom line costs are a priority, recruitment and retention of talent must be considered with every benefit decision.

Are we conducting eligibility audits?

One of the largest causes of benefit leakage is outdated or inaccurate coordination of benefits. Employees may inadvertently fail to notify their employer of a change in their dependent’s status, but regardless of the reason, employers have an obligation to protect their health plan by ensuring that claims are not paid to anyone who is not truly eligible for coverage. Eligibility audits are a helpful tool for identifying such scenarios as dependents that have exceeded the plan’s age limit, a change in marital status such as a divorce, or cases when a child is not a legal dependent per the terms of the plan, such as a nephew or grandchild. According to Employee Benefit Advisor, a dependent eligibility audit can provide a typical ROI of nearly 15 percent and millions of dollars in cost savings. Organizations should conduct an eligibility audit at least every four years in order to identify enrollees who, per the plan guidelines, should no longer be eligible for coverage

Have we considered self-funding?

According to the Kaiser Family Foundation’s 2014 Employer Health Benefits Survey, more employers are self-funding their employee benefits, and that number has been on the rise. According to Kaiser, 15 percent of covered employees at small companies with 3-199 employees, and 81 percent of covered employees at larger firms, are enrolled in plans which are either partially or completely self-funded. CFOs should consider the advantages of self-funding, which include a greater flexibility in plan design and benefit options, access to actionable claims data, and lower administrative costs. Self-funding also provides enhanced cash flow options. Unlike fully insured plans that require advanced premium payment, under a self-funded plan, claims can be funded as they are due, which allows employers to keep more money in a bank account where it can earn interest.

For a health benefit plan assessment and customized cost-avoidance solution for your health benefit plan, contact the benefit experts at POMCO today.


¹ After this article was published in December 2015 Congress delayed the Cadillac tax until 2020. Read more here.



Does Your Consumer-Driven Health Plan Put You At Risk for the Cadillac Tax?

Affordable Care Act (ACA), Out-of-Pocket-MaximumsThere are significant questions regarding 2018’s potential Cadillac Tax in the minds of employers across the nation. The Affordable Care Act’s (ACA) proposed 40 percent excise tax on high cost plans has the potential to either significantly add costs to employers’ health plans, or require a shift of costs to members in an effort to avoid the tax – something many employers are hesitant to concede. Aside from the potential impact to health benefit plans, new insight indicates that the Cadillac tax may impact employers’ abilities to offer consumer-driven health plans (CDHP) such as flexible spending accounts (FSA) and health savings accounts (HSA). Read on to prepare your benefit strategy prior to 2018.

Potential Impact to FSAs

The Cadillac tax intends to levy a 40 percent penalty on health plans with annual premiums in excess of $10,200 for individual coverage, and $27,500 for family coverage. The tax applies only to the portion of the plan cost that falls above those thresholds. Since the maximum FSA contribution limits, which are estimated to be $2,700 by 2018, are typically additive to other benefit costs for employees that elect contributions, the cumulative cost of coverage between health and FSA plans could easily trigger the penalty fee for generous health plans. For this reason, some employers are considering terminating their FSA benefit, but maintaining their health benefit plan structure.

According to BenefitsPro.com, a recent survey of hospital management personnel identified that many hospitals intend to remove their FSA plans from their benefit plan offering if the ACA’s Cadillac Tax goes into effect in 2018. This potential trend is because FSA benefits may have an impact on triggering the Cadillac Tax penalty. According to the Kaiser Family Foundation, an estimated 26 percent of employers anticipate that their FSA offering may, in part, trigger the excise tax.

As an alternative solution to canceling an FSA plan entirely, other employers are considering re-structuring their FSA to only allow employer contributions, or to limit the employee’s contribution below the maximum IRS thresholds, thus diminishing the risk that an employee’s additional contribution may push the employee’s total cost of overage over the Cadillac Tax’s acceptable limit

Aside from FSA plan reductions, employers may also want to consider reducing such pre-tax ancillary health benefit options as critical disease or hospital indemnity plans.

Potential Impact to HSAs

As the proposed ACA mandate currently stands, employer and employee contributions to HSAs are also subject to the Cadillac Tax’s threshold limit. While the popularity of HSAs coupled with high deductible health plans (HDHP) have been on the rise as employers look for solutions to mitigate their overall benefit plan costs, HSAs, when coupled with employer pre-tax contributions, may now increase an employer’s risk of being subject to the 40 percent excise tax.

Similar to the decisions facing employers offering FSAs, employers are considering reducing or eliminating their pre-tax contributions to their employees’ HSA accounts in order to avoid reaching the Cadillac Tax’s threshold. Such a trend could reduce the effectiveness of HSAs as a successful strategy for employees to reduce their out-of-pocket health care costs. It may also limit opportunities for employers to incentivize population health management program initiatives in the form of HSA contributions – an employee engagement strategy that has been extremely successful in increasing wellness program participation.

Potential Changes in the Future

As a result of concerns expressed by organizations that the Cadillac Tax may impact their ability to help employees pay for quality health care expenses, many benefits professionals are advocating for benefit accounts to be excluded from the threshold limits before the Cadillac Tax goes into effect in 2018.  In addition, there is still hope that the United States Treasury Department and the Internal Revenue Service (IRS) will delay enforcement of the tax through extended transition relief.


Projecting the Impact of the Proposed Cadillac Tax on Employer Sponsored Health Coverage

Quantifying the Population Health Management InvestmentOne aspect of the Affordable Care Act (ACA) that has been looming large in the now foreseeable future is the “Cadillac Tax,” a 40 percent excise tax on employer-sponsored health plans with annual premiums in excess of $10,200 for individual coverage, and $27,500 for family coverage. The tax applies only to the portion of the plan cost that falls above those thresholds, and was proposed in the initial ACA regulations passed back in 2010. For years, employers have been warily waiting for final regulations to be issued regarding the Cadillac Tax, and some have even hoped that the regulations may be changed significantly to reduce or remove the tax. As we enter 2016, however, the Cadillac Tax is still anticipated to become a mandated requirement in 2018. Employers are working with their brokers and benefits administration partners to project how the Cadillac Tax could impact their health plan, and are making changes to mitigate the potential cost impact.

The purpose of the Cadillac Tax is to reduce overall health care costs and reduce the tendency of companies to provide rich health care benefits to employees as a form of compensation that is not taxed at the same level as ordinary income. Utilization trend data indicates that overly generous health plans lead to over-utilization of health care services, which in turn, increase overall health care spend nationwide. By encouraging employers to move away from overly-rich benefits, the Cadillac Tax hopes to encourage individual plan members to become more responsible, cost-conscientious consumers of health care services.

While this is a goal that has the theoretical potential to financially benefit employers and their health plans, many organizations are casting a worried eye toward the impact reducing their benefits will have on their valued employees. The Cadillac Tax’s requirements are particularly concerning for collectively bargained plans with long-standing negotiated benefit plans. If employers at risk of being subject to the excise tax do not make benefit changes, however, they stand to incur significant costs in the form of penalty tax dollars.

The Congressional Budget Office estimates that the total liability for companies subject to the tax could reach $79 billion from 2018 and 2023, and according to Forbes, 40 percent of employers expect the Cadillac Tax to affect at least one of their current health plans come 2018, while 14 percent expect it to immediately impact the majority of their current health benefit plans. Further, according to Mercer, approximately one third of employers are at risk of paying the Cadillac Tax in 2018 if they do not make adjustments to their health benefit plan costs, and that percentage may increase to as much at 50 percent by 2018.

In addition to the financial impact of the excise tax itself, the Cadillac Tax will further financially impact employers in the form of administrative costs. According to new guidance issued by the Internal Revenue Service (IRS), it is considering two approaches to determine which entity must actually remit payment for the tax — the “insurer,” or for self-funded plans, the employer. Under the other approach being considered, the employer would calculate the tax and direct any applicable plan administrators to pay the portion associated with the plan they administer. Regardless of the final regulatory outcome, the administrative requirements associated with calculating and reporting potential tax implications may significantly impose administrative and financial burdens on many employers.

Given the potential for both tax and administrative cost requirements, many employers may decide they need to lower their health care costs by reducing their health benefit cost share in order to ensure overall affordability of their plan. According to Bloomberg Business, after several years of shifting health care costs to employees, organizations are slowing their adoption of high-deductible health plans (HDHP) in part because they are waiting to see if lawmakers repeal, or revise, the terms of the Cadillac Tax. If the Tax is not repealed, it is anticipated that the increasing trend of offering HDHPs as options or even full replacements to traditional PPO plans is likely to continue in 2018 and beyond.

Other strategies that some employers are implementing to mitigate health plan costs include implementing a working spouse rule, in which employees pay a higher premium to enroll a spouse who has coverage available from his/her own employer – or not allowing the spouse to enroll as primary, or even as secondary, at all. In addition, employers are adding population health management programs to encourage healthy behavior in an effort to reduce risk factors that could lead to high utilization patterns or catastrophic claims.

As 2018 approaches, many employers will be faced with a difficult decision: reduce employee benefits, or face significant tax penalties. For strategic recommendations for mitigating health plan costs without compromising on the quality of your health benefit plan offering, contact the benefits experts at POMCO.


2016 Open Enrollment Reminders for Employers

2016 open enrollment checklistOpen enrollment season is already upon us. This year, make sure your health benefit plan is fully-compliant with 2016 regulations, and form a plan to effectively communicate plan changes and open enrollment requirements to your employees.

2016 Benefit Plan Compliance Requirements

As we approach 2016, employers should work with their brokers and benefit plan administrators to ensure their benefit plans are in compliance with the following 2016 regulations:

  • Prepare for 2016 Affordable Care Act (ACA) reporting requirements. The ACA’s Employer Mandate states that applicable large employers (ALEs) that do not offer affordable, minimum value health coverage to the majority of their full-time employees (FT) and their dependent children will be subject to a penalty if any FTs purchase health coverage through the Health Insurance Exchange Marketplace and receive a premium subsidy credit to help pay for coverage. This mandate became effective January 1, 2015. Employers must be prepared to report to the Internal Revenue Service (IRS) whether or not they offered affordable, minimum value health coverage to employees and their dependent children in compliance with ACA regulations. Review the calculation methods available and determine if your plan meets affordability and minimum value requirements. Click here for more information of employer reporting requirements under the ACA.
  • Verify your grandfathered plan status. A grandfathered plan is defined as a plan that was in existence when the ACA was established in 2010. Certain plan changes will result in a loss of grandfathered status which requires compliance with other ACA mandates, such as $0 member cost share for preventive and routine services. Work with your broker or benefits administrator to verify your grandfather status for 2016. Click here for more information on grandfathered and non-grandfathered plan requirements.
  • Verify your out-of-pocket maximum. Effective January 1, 2016 all non-grandfathered health plans’ out-of-pocket maximums for essential health benefits may not exceed $6,850 for individual coverage and $13,700 for family coverage. Check the maximums on your benefits to ensure your plan is compliant.
  • Embed individual out-of-pocket maximums. Effective January 1, 2016 the ACA also requires that for non-grandfathered health plans the out-of-pocket maximum apply to all individuals regardless of whether they are enrolled under a family or individual health plan option. This means that individual out-of-pocket maximums must be embedded in the plan’s family coverage when the family out-of-pocket maximum exceeds the ACA’s out-of-pocket maximum for individual coverage. Speak with your benefits administrator to ensure its claims processing system will accommodate the embedded out-of-pocket requirements. Click here for more information on embedding out-of-pocket maximums.
  • Review your high deductible health plan (HDHP) and health savings account (HSA) limits. For HDHP-compatible HSAs, a plan’s out-of-pocket maximum must be lower than the ACA’s limits of $6,550 for individual coverage and $13,100 for family coverage. Verify that your plans’ limits are in compliance. In addition, verify that your HDHP’s deductible and out-of-pocket maximums comply with the 2016 limits. Click here for more information on 2016 HSA limits.

Employee Communications

Once you have verified that your health plans are compliant for 2016, follow these tips to effectively communicate required information to your employees and eligible plan members:

  • Distribute summary of benefits and coverage documents (SBC). Per ACA regulations, health plans must provide an SBC to applicants and enrollees to help them understand the benefit options available to them and decide in which plan to enroll. Be sure your SBCs are updated to reflect any changes for 2016 and distributed to all eligible employees and their beneficiaries during open enrollment. Click here for more information on SBC regulations.
  • Distribute annual notices. Work with your benefits plan administrator and broker to ensure you distribute all required annual notice to employees, which may include the following:
    • Notice of Patient Protections
    • Notice of Health Insurance Portability and Accountability Act (HIPAA) Special Enrollment Rights
    • Consolidated Omnibus Budget Reconciliation Act (COBRA) Notice
    • Grandfathered Plan Notice
    • Annual Children’s Health Insurance Program Reauthorization Act (CHIPRA) Notice
    • Women’s Health and Cancer Rights Act (WHCRA) Notice
    • Medicare Part D Notices
    • Michelle’s Law Notice

The ICD-10 Compliance Deadline is Here. Is your Benefits Administrator Ready?

business process outsourcing (BPO)Effective October 1, 2015 all organizations required to comply with the Health Insurance Portability and Accountability Act of 1996 (HIPAA) were required to comply with new regulations associated with medical bill coding. This requirement impacts third party administrators (TPA), insurance carriers, government agencies such as Medicare and Medicaid, and health care providers. The primary goal of the new regulations is to enable more efficient processing of claims by utilizing more descriptive coding definitions.

The October 1, 2015 deadline required all HIPAA-compliant entities to begin using an updated medical bill diagnosis and procedure coding set for all medical claims incurred on or after October 1, 2015. The new mandated system is the International Classification of Diseases 10th Edition (ICD-10). ICD codes are medical codes that provide a detailed representation of a patient’s condition or diagnosis. The previous system, ICD-9 has been in use since 1979.

The transition to ICD-10 will improve clinical communications as the new coding system allows for the capture of more detailed data regarding signs, symptoms, risk factors, and comorbidities to better describe the patient’s clinical condition. In addition to providing more detailed clinical data, the ICD-10 coding system will allow health care providers in the United States to exchange information with international providers, who have been utilizing the ICD-10 system for many years.

From a technical perspective, the new ICD-10 codes allow for more detailed procedure and diagnostic coding through their use of elongated alphanumeric sequences. The previous ICD-9 codes are three to five, primarily numeric, digits in length, while the new ICD-10 codes are three to seven alphanumeric digits. Where the ICD-9 code set offered approximately 14,000 unique diagnosis codes and approximately 4,000 unique procedure codes, the ICD-10 system offers health care providers more than 69,000 unique diagnosis codes and approximately 72,000 unique inpatient procedure codes.

For HIPAA-compliant entities, the full code-set replacement from ICD-9 to ICD-10 represents a significant system and technological undertaking, especially since TPAs, insurance carriers, and other payers must maintain the capability to process ICD-9 codes for claims with dates of service prior to October 1, 2015. Compliance, however, is mandatory, and there is no grace period for providers or payers who fail to comply by the compliance date. Claims that do not contain ICD-10 codes for services provided on or after the implementation deadline will be considered non-HIPAA compliant. The original ICD-10 compliance deadline was set for October 1, 2014; however, the Centers for Medicare and Medicaid Services (CMS) delayed the requirement until October 1, 2015. It was the belief that the extra year would allow providers and payers the extra time needed to meet the mandated requirements.

For more information on POMCO’s ICD-10 compliance, click here.


New Regulations Impacting the Calculation of Full Time Employees for the ACA’s Applicable Large Employers

ALE CalculationsThe recently signed Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 amends the section of the Affordable Care Act (ACA) that defines an applicable large employer, and will impact how employers calculate their total number of full time employees moving forward.

According to the Internal Revenue Service (IRS) an employer’s status as an applicable large employer is determined each calendar year and generally depends on the average size of the organization’s workforce during the prior year. If an employer has fewer than 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is not an applicable large employer for the current calendar year and is therefore not subject to the ACA’s employer shared responsibility provisions or information reporting requirements for the current year.

If an employer does have at least 50 full-time employees, including full-time equivalent employees, on average during the prior year however, the employer meets the definition of an applicable large employer for the current calendar year, and is therefore subject to the employer shared responsibility provisions and the employer information reporting provisions.

The Surface Transportation and Veterans Health Care Choice Improvement Act now allows employers to calculate whether they meet the applicable large employer definition by excluding employees enrolled in TRICARE or veteran’s coverage. Since the effective date of this new provision is January 1, 2014, employers that will be impacted by this provision may recalculate their status for their current plan year.

Employers looking to recalculate their total number of full-time employees and full-time equivalents should note that not all TRICARE or veteran’s coverage plans will qualify as coverage, as not all plans meet the ACA’s definition of minimum essential coverage. More guidance is needed to determine which plans qualify. Employers should also be aware that this new provision only affects how an employer counts employees to determine applicable large employer status. Employees eligible for qualifying TRICARE or veteran’s coverage are not otherwise excluded from the employer shared responsibility requirements.

Employers who believe their applicable large employer status may be impacted by this new regulation may want to survey their employees to determine if any are covered by qualifying TRICARE or veteran’s coverage, and should seek the assistance of legal counsel before completing any filings.


Catastrophic Conditions and the Benefits of Stop Loss Protection

Catastrophic Claims and Stop-LossA self-funded employee benefit plan offers customization and flexibility that inherently allow an employer to directly manage the overall costs of its plan. Such elements as case management, proper eligibility and coordination of benefits administration, and custom out-of-network claim negotiations are all elements of a successfully managed self-funded plan that can reduce costs without reducing benefits. Despite the very best plan management, however, no plan can avoid catastrophic claims. There are ways for self-funded plans to mitigate the impact of even these costly impacters, however.

A layer of stop-loss insurance can be added to a self-funded plan to provide this additional financial protection. Stop-loss is a product that provides protection for self-funded plans by serving as a reimbursement mechanism for catastrophic claims exceeding pre-determined levels. Stop-loss insurance can benefit groups that are not large to spread their financial risk across their full populations.

Stop-loss coverage may be purchased in either specific and/or aggregate policies.

  • Specific stop-loss provides protection for the employer against a high claim on any one individual.
  • Aggregate stop-loss provides a maximum limit on the total dollar amount payable for all eligible expenses that an employer would pay during a contract period.

An expert third party administrator (TPA) can work with an employer and/or its broker to review claims history, current diagnoses, and prospective plan costs using sophisticated predictive modeling techniques to determine the most appropriate stop loss protection needed for the plan year. A determination of necessary stop-loss coverage takes into consideration the estimated costs of catastrophic conditions and disease states, among other factors.

A recent report from Sun Life Financial reveals that cancer remains the costliest disease currently impacting self-funded plans in the United States. According to Sun Life Financial, cancer accounted for more than 25 percent of the reimbursements it paid out during a four-year research period. In addition to the high cost of cancer claims, according to Sun Life Financial, end-stage renal disease accounted for 33.5 percent of its total reimbursement costs during the same time period.

The report also identified the financial impact of intravenous medications. According to the report, in 2014 alone, intravenous medications accounted for 13 percent of total paid stop-loss claims, with the top 20 intravenous medications representing 65 percent of the total cost of intravenous medications administered for catastrophic claims conditions, many of which were used to treat cancers.

Patients whose claims exceed $1 million can be hugely impactful to employers of any size. According to the report, cancer, congenital anomalies, and premature births are the conditions that most frequently result in patients exceeding the $1 million claim level.

Self-funded organizations not currently protecting their health plan with stop-loss insurance should speak with their TPA to determine if specific and/or aggregate coverage may be a beneficial element of an overall cost-mitigation strategy. An analysis of current diagnoses and predictive modeling techniques can help to prognosticate the potential impact of such catastrophic conditions as cancers or end stage renal disease and can result in strategic recommendations for maximum protection.


Final ACA Regulations: Summary of Benefits and Coverage and Uniform Glossary

ACA changesOne 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.


Effective Dates

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.


Remember to Embed Your Out-of-Pocket-Maximums for 2016

Affordable Care Act (ACA), Out-of-Pocket-MaximumsSix 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:

  1. 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.
  1. 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.