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FAQ Guidance Affirms That HHS Interpretation of Cost-Sharing Limit Will Apply to Self-Insured and Large Group Health Plans After 2015

FAQs About Affordable Care Act Implementation Part XXVII (May 26, 2015)

DOL Website

HHS Website

Visit the Health Care Reform Community on Checkpoint to join the discussion on this development (for Checkpoint subscribers to EBIA’s Health Care Reform manual).

The DOL, IRS, and HHS have jointly issued FAQ guidance affirming a somewhat controversial position taken by HHS regarding application of the self-only maximum annual limitation on cost-sharing under health care reform. In prior guidance, including the final 2016 parameters regulations (see our article), and an FAQ posted earlier this month (see our article), HHS took the position that the self-only cost-sharing limit applies to each covered individual, whether the individual has self-only, family, or other coverage. The new FAQs affirm that the self-only annual limit will apply to each covered individual, regardless of whether the coverage is self-only coverage, under all non-grandfathered group health plans, including self-insured plans, large group health plans, and plans that are high-deductible health plans. The rule does not apply to plan or policy years beginning in 2015, but it will apply to years beginning in 2016 or later. The FAQs include an example illustrating the agencies’ interpretation of the limit.

Separately, the FAQs respond to Congressional criticism of previous FAQ guidance (see our article) concerning the health care reform rule that prohibits group health plans and insurers from discriminating against health care providers who are acting within the scope of their licenses or certifications. The FAQs effectively withdraw the earlier guidance and announce that the agencies will take no enforcement action against a plan or insurer under the nondiscrimination rule provided the plan or insurer is using a reasonable good faith interpretation of the statutory provision.

EBIA Comment: As we have previously noted, the agencies’ interpretation of health care reform’s annual cost-sharing limitation effectively embeds an individual out-of-pocket limit in all family group health plans with a higher family deductible—whether or not the high-deductible coverage is meant to make employees HSA-eligible. While it is now clear that this aspect of the rule will not apply until next year, that does not leave a lot of time for plan sponsors and insurers to prepare. As for the health care provider nondiscrimination rule, these FAQs leave that rule as murky as ever, although plans and insurers can take some comfort in the agencies’ position regarding enforcement. For more information, see EBIA’s Health Care Reform manual at Section IX.B (“Cost-Sharing Limits”) and XIII.D (“Nondiscrimination in Health Care Providers”); see also EBIA’s Consumer-Driven Health Care manual at Section X.C (“Family HDHP Coverage”) and EBIA’s Self-Insured Health Plans manual at Section XV.D.4 (“Out-of-Pocket Maximums and Health Care Reform’s Overall Cost-Sharing Limit”).

Contributing Editors: EBIA Staff.

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