June 11, 2014
The Departments of Treasury, Labor, and Health and Human Services (HHS), which are responsible for implementing the Affordable Care Act1 (collectively, the “Departments”), have published answers to two sets of frequently asked questions (FAQs).2 The FAQs address two of the law’s requirements for non-grandfathered plans: the new rules applicable to out-of-pocket limits and the preventive services requirement.
This Capital Checkup summarizes this guidance, which will help plan sponsors understand the law’s requirements, especially as they begin the process of considering benefit changes for the 2015 plan year.
Effective with the plan year beginning on or after January 1, 2014, non-grandfathered group health plans must comply with a new annual limit on cost sharing, also known as an out-of-pocket limit.3 The maximums for the 2014 and 2015 plan years are noted in the table below.
|The Affordable Care Act’s Out-of-Pocket Limit, 2014 and 2015|
* For 2014 only, the out-of-pocket limits are the same as the limits applicable to high deductible health plans paired with Health Savings Accounts (HSA).
** Starting in 2015, the out-of-pocket limits are no longer tied to HSA limits, but are calculated based on a percentage increase from the previous year. The percentage increase used this year was 4.2 percent (rounded).
The answers clarify the following rules for the 2015 plan year:
Non-grandfathered plans must provide certain preventive services without imposing any cost sharing when those services are obtained from in-network providers. One category of required preventive services includes certain services that are recommended by the U.S. Preventive Services Task Force (USPSTF).4 When the USPSTF adds or updates a recommendation, that recommendation becomes a plan requirement effective with the plan year beginning one year after the USPSTF issues the new or updated recommendation.
On September 24, 2013, the USPSTF revised its recommendation regarding medications for risk reduction of breast cancer in women who are at increased risk for breast cancer and at low risk for adverse medication effects. The revised recommendation is that “clinicians should offer to prescribe risk-reducing medications, such as tamoxifen or raloxifene.”5 Consequently, non-grandfathered group health plans must cover risk-reducing medications, such as tamoxifen or raloxifene, for women without cost sharing subject to reasonable medical management. This rule applies to the plan year beginning on or after September 24, 2014 (i.e., January 1, 2015 for a calendar-year plan).
Another answer provides a safe harbor for plan sponsors that want to offer a tobacco-use-cessation program that is consistent with the USPSTF recommendations relating to tobacco counseling and interventions. The Departments would consider a plan that offers the following program to be in compliance:
This is a safe-harbor design. There are other plan designs that would also comply with the requirements.
Plan sponsors of non-grandfathered health plans should review the rules concerning out-of-pocket limits and their coverage for preventive services to assure that they are consistent with the new guidance in answers to FAQs.
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As with all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their legal counsel for authoritative advice on the interpretation and application of the Affordable Care Act and related guidance, including the new guidance summarized in this Capital Checkup. Sibson Consulting can be retained to work with employers and their attorneys on compliance issues.
2 The Affordable Care Act is the shorthand name for the Patient Protection and Affordable Care Act (PPACA), Public Law No. 111-48, as modified by the subsequently enacted Health Care and Education Reconciliation Act (HCERA), Public Law No. 111-152. (Return to the Capital Checkup.)
3 For background information on this requirement and the transition rule for the first year of applicability, see Sibson Consulting’s May 10, 2013 Capital Checkup, “Guidance on Out-of-Pocket Maximums in 2014 for Non-Grandfathered Health Plans.” (Return to the Capital Checkup.)
4 The USPSTF recommendations at issue (those with an A or B rating) are on the Task Force’s website. (Return to the Capital Checkup.)