On May 26, 2015, the Departments of Health and Human Services, Labor, and Treasury, jointly released the twenty-seventh set of FAQs on Affordable Care Act implementation issues.  The FAQs clarify the application of the ACA’s out-of-pocket limit rules for plan years beginning in 2016.

Under the ACA, all non-grandfathered group health plans must ensure that annual out-of-pocket cost sharing (e.g., deductibles, coinsurance and copayments) for in-network essential health benefits does not exceed certain limits, as shown below.

In February, HHS “clarified” that the ACA’s out-of-pocket limits apply to each individual, even those enrolled in family coverage.  For example, suppose an employee and spouse enroll in family coverage with an annual out-of-pocket limit of $13,000, and during the 2016 plan year, the spouse has $10,000 of out-of-pocket expenses and the employee has $3,000.  Under the new rule, the spouse’s out-of-pocket expenses are capped at the individual limit of $6,850 (with the remaining $3,150 being covered by the plan).  The employee is still subject to cost sharing, however, until the $13,000 plan limit is reached.

The FAQs confirm that HHS’ clarification applies to all non-grandfathered group health plans, including large group and self-insured plans.  Meaning, starting with 2016 plan years, all non-grandfathered plans must contain an embedded individual out-of-pocket limit for family coverage.  For these purposes, family coverage includes any tier of coverage other than employee-only.

The FAQs also confirm that these rules apply to high-deductible health plans (HDHPs).  The embedded out-of-pocket limit rules do not impact HSA-qualified HDHPs, as a family HDHP will not be required to start paying medical claims under the ACA out-of-pocket rule until the minimum annual deductible for family HDHP coverage is satisfied.  In other words, by the time the embedded individual out-of-pocket limit is reached, the employee will have satisfied the minimum annual deductible for HDHP coverage.  Contribution and out-of-pocket limits for HSAs and HDHPs are shown in the table below.