Thursday, April 30, 2015

Changes to Minimum Value and Out-of-Pocket Maximum PPACA Rules Embedded in New HHS Guidance

2016 Cost Sharing Limits 
The 2016 maximum annual out-of-pocket limits are confirmed at $6,850 for self-only coverage and $13,700 for other than self-only coverage (e.g., family coverage, self plus one, etc.).  The Final Rule also clarifies that the out-of-pocket limit for individual coverage applies to all enrollees, even if they are enrolled in family coverage. For example, if the plan has an individual out-of-pocket maximum of $5,000 and a family out-of-pocket maximum of $10,000, then if any family member’s out-of-pocket maximum reaches $5,000, services for that particular family member will be covered at 100% coinsurance.  Notably, it would appear that this clarification will likely extend to self-funded and large-group fully-insured plans as well, so all plan sponsors should revisit their plan design to ensure the out-of-pocket maximums are in compliance (subject to future clarification prior to the effective date of this provision). 
Minimum Value Standards 
The Final Rule establishes new standards by which employer-sponsored plans meet the minimum value requirement.  Under the Final Rule, in order to provide “minimum value”, an employer-sponsored plan not only must meet the quantitative standard of the actuarial value of benefits (i.e., provide 60% actuarial value), but also must provide a benefit package that meets a minimum standard of benefits.  The Final Rule provides that an employer-sponsored plan must provide “substantial” coverage of both inpatient hospital services and physician services in order to meet the new “minimum standard of benefits” rule.  Separate further guidance is expected to provide more clarification around the definition of “substantial.”  
These changes to the minimum value rules under the Final Rule will generally apply to employer-sponsored plans, including plans that are in the middle of a plan year, immediately on the effective date of the final regulations, February 27, 2015. However, there is relief for an employer that adopted a nonconforming plan before November 4, 2014.  For employers that entered into a binding written commitment to adopt, or began enrolling employees into a nonconforming plan prior to November 4, 2014, the new rules will not apply until the end of the plan year (as in effect under the terms of the plan on November 3, 2014), so long as that plan year begins no later than March 1, 2015. ...
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