The Affordable Care Act (ACA) requires non-grandfathered group health insurance plans to limit the amount participants, and their families, pay for essential health benefits. This requirement is commonly referred to as the cost sharing limits or the limitations on out-of-pocket costs. This article outlines the cost sharing limits for plan years beginning in 2016.
Cost Sharing Limits 2016
For plan years beginning in 2016, the maximum annual limitation on cost sharing is:
$6,850 for self-only coverage (up from $6,600 in 2015)
$13,700 for coverage other than self-only coverage (up from $13,200 in 2015)
Recently, the U.S. Department of Health and Human Services (HHS) clarified in an FAQ that the self-only maximum annual limitation on cost sharing applies to each individual, regardless of whether the individual is enrolled in self-only coverage or in coverage other than self-only. The Departments will apply this clarification only for plan or policy years that begin in or after 2016.
Example of Cost Sharing Rules
To help illustrate the cost sharing rules, HHS provides this example:
Assume that a family of four individuals is enrolled in family coverage under a group health plan in 2016 with an aggregate annual limitation on cost sharing for all four enrollees of $13,000 (note that a plan is permitted to set an annual limitation below the maximum established under section 1302(c)(1), which is an aggregate $13,700 limitation for coverage other than self-only for 2016).
Assume that individual #1 incurs claims associated with $10,000 in cost sharing, and that individuals #2, #3, and #4 each incur claims associated with $3,000 in cost sharing (in each case, absent the application of any annual limitation on cost sharing).
In this case, because, under the clarification discussed above, the self-only maximum annual limitation on cost sharing ($6,850 in 2016) applies to each individual, cost sharing for individual #1 for 2016 is limited to $6,850, and the plan is required to bear the difference between the $10,000 in cost sharing for individual #1 and the maximum annual limitation for that individual, or $3,150.
With respect to cost sharing incurred by all four individuals under the policy, the aggregate $15,850 ($6,850 + $3,000 + $3,000 + $3,000) in cost sharing that would otherwise be incurred by the four individuals together is limited to $13,000, the annual aggregate limitation under the plan, under the assumptions in this example, and the plan must bear the difference between the $15,850 and the $13,000 annual limitation, or $2,850.
Employers offering an employer health insurance plan should work with their health insurance advisor to ensure their total health benefits package meets the 2016 cost sharing limits.
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