New for 2016: Embedded Individual Out-of-Pocket Maximums Apply to Health Plans

This summer, the Departments of Health and Human Services (HHS), Labor (DOL) and Treasury, who are all charged with overseeing the Affordable Care Act (ACA) confirmed that starting January 1, 2016, non-grandfathered self-funded and large group health plans must apply embedded self-only out-of-pocket (OOP) maximums to each individual enrolled in family coverage if the family’s OOP maximum exceeds the ACA’s OOP limit for self-only coverage. In 2016, that will change to $6,850 (see chart below). All employers, but especially those with high deductible health plans, should review how these new rules will apply for their group health plans and make any necessary changes as it may affect the design of the plans. The new rules apply to all non-grandfathered group health plans, including self-funded plans.

This means that self-funded and large group plans may not require any individual to pay more than $6,850 in cost-sharing for essential health benefits in 2016—even if the individual has not reached the plan’s family OOP limit. Because a deductible is a form of cost-sharing, a plan with a family deductible greater than $6,850 in 2016 must incorporate an embedded self-only deductible that does not exceed that amount.

The ACA limits maximum out-of-pocket cost sharing amounts for essential health benefits in non-grandfathered plans as follows: 

     2014    2015   2016
Self-only Coverage    $6,350    $6,600   $6,850
Family Coverage    $12,700    $13,200   $13,700


It is important to consider the potential impact if a Health Reimbursement Account (HRA) is offered with the medical plan. The employer group will need to determine if they will follow the same rules for the HRA as they are for the medical. The employer group should review this carefully and coordinate with their HRA administrator to ensure that the plan rules are clear, and to determine if any amendments will need to be made to the supporting plan documents or summary plan descriptions.

Source: SHRM


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