The U.S. Department of Health and Human Services (HHS) has announced the inflation-adjusted maximum out-of-pocket (OOP) limits that will apply to non-grandfathered plans for plan years beginning in 2022. The OOP limit includes the plan’s deductible and cost sharing for benefits that are considered essential health benefits (EHBs) under the Affordable Care Act (ACA).
Lockton comment: The final OOP limits are $400 less than the proposed numbers due to HHS changing the methodology in determining the cost of living adjustments.
Self-insured plans and large-group insured plans are not required to cover all EHBs (although small-group insured plans are), but to the extent the plans do cover an EHB, they may not impose annual or lifetime dollar limits on the benefit. Additionally, OOP expenses for in-network EHBs must accumulate against the maximum OOP limit.
So, what are these EHBs? The ACA lists broad categories of essential health benefits (e.g., emergency care, prescription drugs, mental health and substance abuse treatments, preventive care, maternity and newborn care). Each state must designate a “benchmark plan,” with benefits included in that plan being the EHBs that must be covered under individual and small-group insurance policies regulated by that state. In contrast, self-funded and large-group insured employer plans may choose any state’s definition of benchmark plan for purposes of complying with the annual and lifetime dollar limits and OOP provisions irrespective of the location of the plan sponsor or third-party administrator.
Non-grandfathered plans must apply an embedded OOP limit for everyone enrolled in coverage other than self-only coverage. This requires each enrollee to have his or her own individual OOP limit on essential health benefits that is no higher than the maximum self-only OOP limit. A plan would violate the ACA maximum OOP limit provision during its 2022 plan year unless it applied an OOP limit no higher than $8,700 to each individual enrolled as part of a family and, in addition, applied an overall OOP limit to the family no higher than $17,400.
Lockton comment: The health savings account (HSA) rules under the tax code also limit the in-network OOP expenses an insured may incur under an HSA-compatible high-deductible health plan (HDHP). Those limits are different from the ACA-imposed limits in several ways. The HSA limits are a different amount and have been subject to different inflation adjustment calculations (the IRS will issue the 2022 HDHP OOP maximums later this year). The HDHP OOP limits must take into account in-network OOP expenses without regard to whether the expenses are for essential health benefits, and without regard to whether the HDHP is a grandfathered or non-grandfathered plan. Those amounts for 2021 (the limits for 2022 have not yet been published) are $7,000 for self-only coverage and $14,000 for family coverage. So, even though the EHB limits may be higher, the HDHP must use the lower amounts for participants to fund, or have funded on their behalf, an HSA.
COBRA and the marketplace
HHS has finalized a rule that will allow COBRA qualified beneficiaries to move from COBRA coverage to marketplace (exchange) coverage when a former employer or the government completely ceases to provide a COBRA subsidy. The new rule would allow a COBRA beneficiary to move to marketplace coverage when their former employer stops subsidizing COBRA costs under a severance agreement. Likewise, when the ARPA COBRA subsidy expires (see our alert), the individual will get an enrollment right to add marketplace coverage. Qualified beneficiaries have 60 days before or after the end of subsidized coverage to enroll.
Lockton comment: Many of the state marketplaces already allow an enrollment right when a COBRA subsidy ends.
Employer health plans are not subject to the same rule, however. While a marketplace enrollment right is available, the cessation of a COBRA subsidy does not give the person a HIPAA special enrollment right to add coverage under an employer health plan (such as coverage through a spouse or a domestic partner).