The Department of Health and Human Services (HHS) has finalized maximum out of pocket limits for in-network essential health benefit (EHB) services covered by a health plan for 2019 at $7,900 for single coverage and $15,800 for any coverage other than single plan. HHS also released a fact sheet.
Under health care reform, a health plan is subject to out of pocket caps that can be adjusted by HHS for future years. The caps apply to all covered EHB in-network services, including deductibles, co-insurance and copays. HHS uses the inflationary trend in health plan premiums to set the new caps.
The limits for 2018 are currently $7,350 for single plan coverage and $14,700 for any coverage other than single plan. Keep in mind, through HHS guidance issued in 2015 for plans as they renew on or after January 1, 2016, the single plan cap applies to each individual covered by the health plan. So, the single plan out of pocket maximum is embedded in the “family” plan so that any member of the family can only incur the single plan out of pocket expense.
The ACA out of pocket maximums differ from the maximums applicable to a qualified high deductible health Plan (HDHP) under which participants can make or receive health savings account (HSA) contributions. The IRS sets the minimum deductibles and maximum out of pocket amounts for an HDHP.
The 2019 HDHP maximum out of pocket maximums to be HSA compatible are $6,750 for single plan and $13,500 for any coverage other than single plan. So it is possible to have an Affordable Care Act (ACA) compatible plan that is not HSA compatible, as the ACA out of pocket maximums are higher than the maximum out of pocket limits to be a HSA qualified health plan.
In a prior Compliance Buzz, we reported that Tax Cuts and Jobs Act eliminated the Affordable Care Act (ACA) mandate for individuals purchasing health insurance for months beginning after December 31, 2018. Effective January 1, 2019, the Individual Mandate goes away; however, the Employer Shared Responsibility penalties remain.
The IRS released Revenue Procedure 2018-34 in late May that announced the percentage used in the ACA affordability calculation as an increase to 9.86%. Although the Revenue Procedure refers to the Exchange subsidies for the §36B premium tax credit, the IRS had previously confirmed in IRS Notice 2015-87 that the employer mandate safe harbors would be indexed for inflation the same way.
The Employer Shared Responsibility penalties (as estimated for 2019) are estimated to be $2,500 for failure to offer coverage under 4980H(a) and $3,750 for failure to offer affordable, minimum value coverage under 4980H(b). The 2019 penalties list here are estimates based upon increase in average per capita premium for U.S. health insurance coverage as determined by HHS and have not been released yet.
Employers and the brokers that work with employers that offer a group health plan, regardless of being an HDHP, need to be aware of the new limits for 2019 renewals and assure that their health plan and those of their clients remains compliant.