FAQs About Affordable Care Act Implementation Part 40 (Aug. 26, 2019)
The DOL, HHS, and IRS have jointly issued an FAQ addressing whether health plans must count drug manufacturers’ coupons toward the annual cost-sharing limits under the Affordable Care Act (ACA). (These limits apply to non-grandfathered group health plans, including self-insured and insured small and large group market health plans.) Regulations that announced the 2020 benefit and payment parameters (including the maximum annual cost-sharing limits) provided that, for plan years beginning on or after January 1, 2020, plans and insurers need not count the value of drug manufacturers’ coupons toward the annual cost-sharing limits when a medically appropriate generic equivalent is available (see our Checkpoint article). After the regulations were released, stakeholders pointed out that this provision implies that, in any other circumstances, plans and insurers must count such coupon amounts toward the annual cost-sharing limits, and that such a requirement could create a conflict with certain rules for high deductible health plans (HDHPs) that are intended to allow eligible individuals to establish HSAs.
Explaining that, for purposes of determining whether the HDHP minimum deductible has been satisfied, HDHPs must disregard drug discounts and other manufacturers’ and providers’ discounts and may only take into account amounts actually paid by the individual, the FAQ acknowledges that HDHP insurers or sponsors may be unable to comply with both rules simultaneously. The agencies intend to address this conflict in the regulations that announce the 2021 benefit and payment parameters. Until such regulations are effective, the agencies will not initiate an enforcement action if an insurer or plan excludes the value of drug manufacturers’ coupons from the annual cost-sharing limits, including when no medically appropriate generic equivalent is available.
EBIA Comment: The rule announced in the 2020 benefit and payment parameters was intended to discourage providers and patients from choosing expensive brand-name drugs when a less expensive and equally effective alternative is available. HHS also proposed other rules designed to encourage the use of generic drugs but did not include them in the final parameters, noting their complexity and administrative burden. It will be interesting to see what direction the agencies take when the 2021 benefit and payment parameters are proposed, including how they reconcile any conflicting rules such as the one addressed in this FAQ. For more information, see EBIA’s Self-Insured Health Plans manual at Section XI.E.7 (“Copay Accumulator Programs”). See also EBIA’s Consumer Driven Health Care manual at Section X.F (“What Expenditures Are Applied Toward the HDHP Required Minimum Deductible?”) and EBIA’s Health Care Reform manual at Section IX.B (“Cost-Sharing Limits”).
Contributing Editors: EBIA Staff.