Embedded Out-of-Pocket Maximums

Recent guidance from the Department of Health and Human Services (HHS) and the Department of Labor (DOL) provides that, effective for plan years beginning on or after January 1, 2016, non-grandfathered health plans must use embedded out-of-pocket maximums.

What is an embedded out-of-pocket maximum?

HHS stated that the ACA’s annual out-of-pocket maximum (MOOP) for self-only coverage will apply to all individuals, regardless of whether an individual is covered by self-only coverage or coverage other than self-only (i.e. family coverage).For Example:

If an HDHP’s family coverage has a $10,000 out-of-pocket maximum and one individual in the family coverage incurs $20,000 in expenses from a hospital stay, then that individual would only be responsible for paying the cost sharing related to the costs of the hospital stay up to the annual limit on cost sharing for self-only coverage ($6,850 for 2016). The rest of the family members would be responsible for the remaining $3,150 OOP max.