Q: Is it true that the limitation on maximum out-of-pocket costs has been delayed until 2015?
A. While the Affordable Care Act is based on the promise of minimizing out of pocket (OOP) costs, some communities have expressed concern about news of a possible delay in implementation of a cap of those costs. The worry had been particularly acute for people with chronic and serious health conditions that require expensive medications.
The truth is that in some cases, the limitation has been delayed. The most important thing to understand is that the delay is limited to group plans – and not the individual plans Americans are buying through the exchanges. Here’s what you need to know:
- The delay only applies to group plans. Non-grandfathered individual policies must have a single out-of-pocket (OOP) limit that does not exceed $6,350 per person ($12,700 family), for all covered treatment (stand-alone pediatric dental plans can have separate limits).
- In the group market, most plans use a separate benefits administrator for medical care and pharmacy benefits. In that case, each one can have a separate $6,350 OOP limit in 2014, switching to one unified limit in 2015 instead. In Health Affairs, Tim Jost noted that the delay is unfortunate for people with complex medical conditions, and that it probably could have been avoided. But he also points out that transitional delays like this are common with major regulatory changes.
- Because of the Mental Health Parity and Addiction Equity Act of 2008, policies may not have separate OOP limits on medical and mental health care. Even if separate medical and mental health benefits administrators are used, OOP costs must be combined with an aggregate $6,350 ($12,700 family) limit.
- For group plans with separate benefits administrators for medical and pharmacy coverage, the 2014 requirement depends on the plan’s design. If the pharmacy coverage imposes a separate OOP maximum, it must not exceed $6,350 ($12,700 family) in 2014. This is an example of group coverage with separate benefits administrators and a separate limit on prescription costs (in this case, both the medical and pharmacy OOP limits are far lower than the limits imposed by the ACA).
- But if the pharmacy benefit has no OOP maximum, it is not required to implement one in 2014. This group coverage is an example – it uses a separate benefits administrator for pharmacy, with no OOP maximum on the pharmacy benefits.
- In 2011, only 14 percent of employer group plans had OOP limits on prescription coverage. But not all of those plans utilized separate benefits administrators for prescriptions. If the coverage is integrated under one administrator, pharmacy and medical costs have a combined $6,350 OOP limit in 2014.
- In a group plan with a separate prescription OOP limit, costs for a single individual could reach $12,700 for combined medical and prescription services. However, some of these plans have lower limits than the law requires. We should not assume that all chronically ill people in these plans will be exposed to $12,700 in OOP costs.
- Under group plans that use a separate benefits administrator and do not impose any OOP maximum on prescription costs, people who need expensive medications could still incur very high OOP costs this year. But prior to the ACA, there was no regulation in this area at all. Insureds are no worse off than they were last year. And next year, they’ll be far better off.
- In 2015, all non-grandfathered plans have to comply with the single unified OOP maximum, which is expected to be $6,750 ($13,500 family).