The New York Times reported this week that the Obama Administration has delayed until 2015 another important Affordable Care Act provision that was to have taken effect next year. This time it’s dollar limits on patients’ total annual out-of-pocket costs for essential health benefits.

Affordable Care Act (ACA) Background

Under the 2010 law, starting in 2014 health insurance plans were to be subject to strict limits on patient cost-sharing requirements, e.g., deductibles, co-pays and co-insurance.  The combined annual “out-of-pocket” maximum for 2014 was slated to be $6,350 for individual plans and $12,700 for family coverage.

More specifically, the Patient Protection & Affordable Care Act provided that in the individual and small group plan markets, the 2014 annual deductible limit was to be $2,000 for self-only coverage and $4,000 for family coverage. The law made clear, however, that the annual deductible limit did not apply to self-insured plans or to large group health plans. Read more.

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Affordable Care Act (ACA) Out-of-Pocket Cap Delayed: Not Enough Time to Comply

Tue Aug 13, 2013

The New York Times reported this week that the Obama Administration has delayed until 2015 another important Affordable Care Act provision that was to have taken effect next year. This time it’s dollar limits on patients’ total annual out-of-pocket costs for essential health benefits.

Affordable Care Act (ACA) Background

Under the 2010 law, starting in 2014 health insurance plans were to be subject to strict limits on patient cost-sharing requirements, e.g., deductibles, co-pays and co-insurance.  The combined annual “out-of-pocket” maximum for 2014 was slated to be $6,350 for individual plans and $12,700 for family coverage.

More specifically, the Patient Protection & Affordable Care Act provided that in the individual and small group plan markets, the 2014 annual deductible limit was to be $2,000 for self-only coverage and $4,000 for family coverage. The law made clear, however, that the annual deductible limit did not apply to self-insured plans or to large group health plans.

However, the law expressly provided that an annual total out-of-pocket expense maximum was to apply to all non-grandfathered health plans, including self-insured plans, thereby capping enrollee cost-sharing exposure for essential health benefits starting in 2014.

The Affordable Care Act directed that patients’ total out-of-pocket maximum expense was to have been tied directly to the out-of-pocket maximum codified for Health Savings Account (HSA)-based High Deductible Health Plans (HDHPs), i.e., $6,350 for self-only plans and $12,700 for family coverage in 2014. Put another way, an enrollee in family coverage would not face total out-of-pocket costs exceeding $12,700 in 2014.

More Time Needed to Comply

According to the Times, a key issue has been that many employer health plan sponsors “needed more time to comply because they used separate companies to help administer major medical coverage and drug benefits, with separate limits on out-of-pocket costs.”

Compounding the problem, plan sponsors tend to use separate computer systems to account for major medical costs and pharmacy benefits, making it difficult to total annual out-of-pocket costs for employees.

The net effect of a 2014 “grace period” for the patient cost-sharing limit appears to be that the $6,350 individual and $12,700 family plan out-of-pocket maximums for combined coverages will not be enforced next year. There may still be annual cost-sharing limits for major medical coverage in 2014, but not for combined medical and pharmacy benefits.

As a result, some patients may see much higher cost-sharing, especially when they have expensive surgical procedures and drug therapies. Indeed, as the Times points out, some drug benefit plans may have no cost-sharing limits in 2014.

It’s particularly intriguing that the delay was apparently “announced” quietly in a February 2013 Labor Department FAQ

To be sure, the grace period delay is in effect only for 2014. The Obama Administration is determined to implement the statutory total cost-sharing limit in 2015.

Nevertheless, the delay will represent a financial burden for some patients, who may now be exposed to higher cost-sharing for combined medical and pharmacy benefits.

Finally, the new delay suggests that Affordable Care Act regulators are facing greater difficulty sticking with their own implementation timetable. With January 1, 2014 now only 140 days away, this latest delay prompts the obvious question: what will be delayed next?