A few weeks ago we posted about a new out-of-pocket limit for group health plans that provide family coverage. HHS announced that the ACA cost-sharing limit for self-only coverage applies to each individual who has family coverage. This embedded individual limit is in addition to the existing limit for family coverage, which applies to the aggregate costs of the covered individuals.

The Limit Applies to Self-Insured Plans

HHS announced the new out-of-pocket limit in the preamble of a long regulation that deals mostly with insurance issues. Unlike most ACA guidance for group health plans, the HHS guidance was not issued jointly with the IRS and the Labor Department. Some commentators questioned whether the new out-of-pocket limit was intended to apply to group health plans.

The three agencies have issued a new set of frequently-asked questions (FAQs Part XXVII) confirming that the new out-of-pocket limit applies to all non-grandfathered group health plans, including self-insured plans and high-deductible health plans. For plans that do not currently apply an embedded individual limit to family coverage, this new rule will create administrative challenges and increase health plan costs.

Effective Date

HHS described the new embedded individual limit as a “clarification” of the existing ACA cost-sharing limits. This characterization raised the question whether the new limit was effective immediately, and perhaps retroactively.

The FAQs state that the three agencies will apply the new individual limit only for plan years that begin in or after 2016.