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New Out-of-Pocket Maximum Rules Explained

The Out-of-Pocket maximum plan feature is meant to limit a participant’s exposure to high expenses that are not covered by the plan.  Beginning with the 2014 plan year, plans may not have an out-of-pocket maximum greater than $6,350 for single coverage and $12,700 for family coverage.  In addition, the out-of-pocket maximum must now include copays, coinsurance, prescription coverage and any deductible.  This adds a welcome simplicity to understanding your out-of-pocket maximum because in prior years some expenses, often copays, deductibles and sometimes prescriptions, did not count toward the out-of-pocket maximum.  Which particular expenses were not included in the out-of-pocket maximum varied from plan to plan adding to confusion and making it more difficult to compare plans.

Some health care expenses remain not included in the out-of-pocket maximum.  For example, your premiums are not included.  Also, the out-of-pocket maximum only needs to apply to in-network essential health benefits for covered services.  Therefore, some benefits may not be included such as chiropractic or expenses out-of-network.

To help plans adjust to the new requirements, there are two limited exceptions:

  • For 2014 only, a plan that has different providers (such as one provider for major medical and another provider for prescription drug benefits) may simply apply the out-of-pocket maximum to the major medical benefit. If the separate (often prescription drug) benefit has an out-of-pocket maximum, it cannot exceed $6,350 for single coverage and $12,700 for family coverage.
  • For years after 2014, a plan that has different providers may divide the out-of-pocket maximum among the benefits provided by the different providers, as long as the total does not exceed the maximum.

Example: In 2015, the out-of-pocket maximum is expected to be $6,750 for single coverage and $13,500 for family coverage.  An employer could use, for instance, a $5,000 deductible for single and a $10,000 deductible for family major medical coverage and a $1,750 deductible for single and a $3,500 deductible for family prescription drug coverage.

PPACA does not override mental health parity requirements, so separate out-of-pocket maximums may not be used for mental health coverage.  This requirement does not apply to grandfathered plans.  It also does not apply to renewed 2013 policies if the state permits renewal of policies that do not fully comply with PPACA.

By Bill Olson and Robert Recchia

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