New Out-of-Pocket Maximum Rule for Employer Health Plans

A new rule will impact all non-grandfathered employer group health plans that are subject to the Affordable Care Act (ACA) as of the plan year beginning in 2016. Plans will be required to implement individual out-of-pocket maximums (OOP Max) for all levels of coverage, including family coverage.

The ACA requires that non-grandfathered group health plans apply an OOP Max for essential health benefits. The 2016 amounts are $6,850 for self-only coverage and $13,700 for all other coverage levels.

On May 26, 2015, a notice was issued jointly by Health and Human Services (HHS), the Department of Labor (DOL) and the Internal Revenue Service (IRS) confirming that the self-only OOP Max does not apply to just self-only coverage. It also applies to each covered individual, regardless of whether the individual is enrolled in self-only coverage or another level of coverage (such as some level of family coverage).

How does the new rule work? Here is an example:

Jane enrolls in her company’s group health plan. She elected the employee + children option so that she covers herself as well as her son and her daughter. The plan year for her company is a calendar year.  Here is a comparison of how the OOP Max rule works currently in 2015 and will change for 2016:

2015 2016
OOP Max Self only:  $6,600

Other levels:  $13,200

Self-only:  $6,850

Other levels:  $13,700

Surgery Expense for Jane (assumes first expense of year) $10,000 $10,000
Amount Jane Owes $10,000 (since she did not enroll in self-only coverage, the $13,200 OOP max applies) $6,850 (with the new rule,  the self-only OOP max applies to each individual enrolled by the employee until the $13,700 OOP max is reached
Amount Paid by Plan $0 $3,150

Employers whose group health plan(s) are impacted by this rule change are required to amend their plan documents, summary plan descriptions and summaries of benefits and coverage to include the new 2016 OOP Max amounts and rule.