On February 20, 2013, the government published Frequently Asked Questions Part XII regarding implementation of the Affordable Care Act (ACA). The FAQs are prepared jointly by the three departments with jurisdiction over implementation of the ACA: the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (IRS).
Short Summary of FAQs XII:
- Self-insured and large group plans are not required to comply with the $2,000/$4,000 limit on deductibles that applies, with limited exception, to non-grandfathered small group plans and issuers.
- Self-insured and large group plans are required to comply with ACA’s annual limit on out-of-pocket maximums. This is the limit on high deductible health plans (HDHPs) associated with Health Savings Accounts (HSAs), and for 2013 the limits are $6,250 for individual coverage and $12,500 for family coverage. For the 2014 plan year only, however, plans may have separate out-of-pocket maximums for different benefits (e.g., a separate maximum for prescription drug and for major medical) if specified criteria are met. (See below for details.)
- Coverage of preventive services. The FAQs include six pages of Qs and As on preventive services, which non-grandfathered group health plans (of all sizes) and individual policies must provide with no cost-sharing requirements (i.e., on a “first-dollar” basis). Several of the items that may be of most interest (based on the number of questions from clients) are:
- Plans may not impose cost-sharing for services provided by an out-of-network provider if the plan does not have an in-network provider for such services.
- Plans may not impose cost-sharing for the cost of a polyp removal during a preventive colonoscopy (performed as a screening procedure).
- A plan cannot cover only oral contraceptives, but must cover all FDA approved contraceptive methods that are prescribed by a health care provider. Plans are not required to cover condoms (or vasectomies) as part of women’s preventive services.
See additional details below under “Coverage of Preventive Services.”
Additional Detail on Compliance with Cost-Sharing Limitations under the ACA
Deductible Limits
The ACA prohibits non-grandfathered small group plans and issuers from imposing annual deductibles in excess of $2,000 for single coverage and $4,000 for family coverage. Self-insured and large group plans are not required to comply with this limit on deductibles. Even for small group plans, the regulations provide an exception: plans may use a higher deductible if they cannot reasonably meet their “metal” level without a higher deductible. This may be the case for “bronze” level plans that provide 60% actuarial value.
The maximum deductible limits are at section 2707(b) of the Public Health Service Act (PHSA), added by section 1302(c)(2) of the ACA. Additional detail on the deductible limits is in the proposed regulations on Essential Health Benefits (EHB) and Actuarial Value (published 11/26/2012), and in final regulations on the same subject (published 2/20/2013).
Out-of-Pocket Limits
Self-insured and large group plans are required to comply with ACA’s annual limit on out-of-pocket maximums. This is the limit on high deductible health plans (HDHPs) associated with Health Savings Accounts (HSAs), and for 2013 the limits are $6,250 for individual coverage and $12,500 for family coverage. The Departments recognize that plans may utilize multiple service providers to administer benefits (e.g., separate TPA for medical, Pharmacy Benefits Manager for Rx, a separate managed behavioral health organization), and that these separate processes will have to be coordinated. Thus, the Departments allow a plan, for the 2014 plan year only, to have separate out-of-pocket maximums for different benefits if:
- the limit is met with respect to major medical (even if not also for Rx or pediatric dental) and
- to the extent the plan has a separate out-of-pocket maximum on coverage other than major medical (e.g., prescription drug coverage), such out-of-pocket maximum does not exceed the dollar amounts noted.
The Departments note, however, that plans cannot impose an annual out-of-pocket maximum on medical/surgical benefits and a separate annual out-of-pocket maximum on mental health and substance use disorder benefits. This is because the Mental Health Parity and Addiction Equity Act (MHPAEA) prohibits plans and issuers from applying a cumulative financial requirement or treatment limitation (such as an out-of-pocket maximum) to mental health or substance use disorder benefits separate from medical/surgical benefits.
The limit on maximum out-of-pocket costs is at section 2707(b) of the Public Health Service Act (PHSA), added by section 1302(c)(1) of the ACA. Additional detail on the out-of-pocket limits is in the proposed regulations on Essential Health Benefits (EHB) and Actuarial Value (published 11/26/2012), and in final regulations on the same subject (published 2/20/2013).
Coverage of Preventive Services
The FAQs include six pages of Qs and As on preventive services, which non-grandfathered group health plans (of all sizes) and individual policies must provide with no cost-sharing requirements (i.e., on a “first-dollar” basis). The following clarifications from the FAQs may be of most interest, based on questions we’ve received from clients:
- A plan or issuer must cover a preventive item or service when performed by an out-of-network provider and not impose cost-sharing with respect to it, if the plan or issuer does not have an in-network provider who can provide that particular service.
- A plan or issuer may not impose cost-sharing with respect to a polyp removal during a colonoscopy performed as a screening procedure. However, cost-sharing may be imposed for a treatment that is not a recommended preventive service, even if the treatment results from a recommended preventive service.
- Aspirin and other over-the-counter items and services recommended by the US Preventive Services Task Force (USPSTF) must be covered without cost-sharing only when prescribed by a health care provider.
- If a USPSTF recommendation applies to a high-risk population, a plan must provide first-dollar coverage of a preventive service to an individual if the individual’s attending physician determines the patient belongs in the high-risk population.
- The annual well-woman preventive care visit, which must be covered with no cost-sharing, might actually entail more than one visit, depending on a woman’s health status, health needs, and other risk factors. Generally, however, the law does not require that each recommended item or service be provided in a separate visit, and plans and issuers may use reasonable medical management techniques to determine the frequency, method, treatment or setting for a recommended preventive item or service, if it is not otherwise specified in the recommendation or guideline.
- A plan cannot cover only oral contraceptives, but must cover all FDA approved contraceptive methods (including those generally available over the counter (OTC)) that are prescribed by a health care provider. However, plans may cover a generic drug without cost-sharing but impose cost-sharing for equivalent branded drugs, unless the woman’s health care provider says the generic brand is medically inappropriate. The FAQs specifically note that plans are not required to cover condoms (or vasectomies) as part of women’s preventive services.
- A plan must make available as a preventive service without cost-sharing both genetic counseling for routine breast cancer susceptibility and BRCA testing, if appropriate as determined by a woman’s health care provider.
- In the HRSA Guidelines recommending annual HIV counseling and screening for sexually active women, “screening” means annual HIV testing.