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embedded out of pocket limits

New Embedded Out of Pocket Requirement

Great news for families with HSA and high deductible plans.  Individual out of pocket maximums will apply EVEN UNDER A FAMILY POLICY. New federal health care reform law regulatory guidance ends lingering uncertainty on how much in out-of-pocket costs employers with high-deductible plans can require employees to pick up.

The guidance, leaves intact the maximum out-of-pocket expenses employers can require employees to pay before health plan coverage kicks in: $6,850 for single coverage and $13,700 for family coverage when the rules go into effect in 2016.

An example illustrates how the HHS-imposed “EMBEDDED” limit on out-of-pocket expenses will work:

An employee and his or her spouse enroll in family coverage with an annual cost sharing limit of $13,000, and during the 2016 plan year, $10,000 of cost sharing payments are attributable to the spouse and $3,000 of cost sharing payments are attributable to the employee. Prior to the HHS’s clarification, the full $13,000 would be payable by the covered individuals because the $13,000 plan limit had not been reached on an aggregate basis. However, with the new EMBEDDED self-only limitation, the cost sharing payments attributable to the spouse must be capped at the self-only limit of $6,850, with the remaining $3,150 being covered 100% by the group health plan. The employee would still be subject to cost sharing, however, until the $13,000 plan limit is reached.

The biggest impact on the new cost-sharing rules will be on employers with high-deductible plans.

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