Cost sharing: Out-of-pocket and deductible rules
Updated: April 3, 2014 - Small group maximum deductible limitations repealed
Update: March 7, 2013 - HHS releases essential health benefits, actuarial value, and accreditation final rule
Sep. 28, 2012
Cost sharing refers to coinsurance, copayments and deductibles, but does not include premiums, balance billing amounts for non-network providers, or spending for non-covered services. Simply put, it includes the services covered by your insurance provider for which you share the cost.
What services are covered with no or limited cost sharing?
The Patient Protection and Affordable Care Act requires most health insurance plans to cover with no cost sharing: preventive services for women, including FDA-approved forms of contraception, checkups, and certain screenings; preventive services and immunization; and essential health benefits (cost-sharing is limited and provides a specified level of coverage based on the actuarial value of essential health benefits provided for under the plan).
Blue Cross Blue Shield of Michigan and Blue Care Network already provided many of these services with little or no cost sharing prior to passage of PPACA. The limited cost sharing requirement does not apply to grandfathered plans.
Is cost sharing applicable on and off the Exchange?
Regardless of market segment, whether the plan is offered on or off Exchange, and irrespective of whether the plan is self-funded or insured, health plans must limit certain cost-sharing.
Cost sharing requirements:
- In 2014, non-grandfathered individual and group coverage is prohibited from imposing annual out-of-pocket maximums on essential health benefits that exceed the out-of-pocket maximum threshold that applies to HSA-compatible high-deductible health plans. For reference, in 2013 these amounts will be $6,250 for an individual and $12,500 for coverage other than self only.
- In 2015 and beyond, the out-of-pocket thresholds on essential health benefits are indexed to the rate of premium growth for the average per capita premium in the U.S. The indexing applies to the maximum out-of-pocket cost sharing on essential health benefits for self-only coverage, with any increases that are not a multiple of $50 rounded down to the next lowest multiple of $50. The amount for self-only coverage is then doubled to calculate the maximum out-of-pocket on essential health benefits for coverage other than self only.
- In 2014, non-grandfathered group health plans are prohibited from imposing a deductible greater than $2,000 for self only coverage, or $4,000 for coverage other than self only (adjusted annually thereafter in the same manner as the indexing for maximum out-of-pocket cost sharing on essential health benefits described above).
- For small group health plans, the deductible limits must be applied in a manner that does not affect the actuarial value of any plan.
Are Indian Health Services subject to cost sharing?
The PPACA provides that a Qualified Health Plan may not impose any cost-sharing on an Indian for services furnished directly by the Indian Health Service, an Indian tribe, tribal Organization, or Urban Indian Organization, or through referral under contract health services. This special cost sharing rule for Indians applies regardless of an Indian's income or metal plan level.
What is BCBSM doing?
BCBSM has decided to participate in Michigan's exchange as a strategy to ensure future market share in the environment where potential coverage shift exists and new entrants are expected due to subsidization and cost sharing credits. BCBSM must make system changes and amend vendor agreements to ensure that it can comply with the maximum out-of-pocket requirements. Currently, pharmacy benefits are often carved out of group coverage and administered apart from the medical coverage, with different out-of-pocket and deductible accumulators.
It is unclear at this time if the maximum out-of-pocket limit applies to both in- and out-of-network coverage. The expectation is that the OOP and deductible requirements only apply to in-network coverage, but this is not clear in the PPACA .
Where can I find more information?
For more information, please go to the healthcare.gov.
The information on this website is based on BCBSM's review of the national health care reform legislation and is not intended to impart legal advice. Interpretations of the reform legislation vary, and efforts will be made to present and update accurate information. This overview is intended as an educational tool only and does not replace a more rigorous review of the law's applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. Analysis is ongoing and additional guidance is also anticipated from the Department of Health and Human Services. Additionally, some reform regulations may differ for particular members enrolled in certain programs such as the Federal Employee Program, and those members are encouraged to consult with their benefit administrators for specific details.