Obama Administration Delays Cap on Out-of-Pocket Costs for Some Insurers
Some consumers will not benefit from the health reform law’s caps on out-of-pocket spending until 2015, according to a policy change made quietly by the Obama Administration in February.
The Affordable Care Act contains a number of provisions designed to protect health insurance consumers from catastrophic costs, including a cap on out-of-pocket expenses. Beginning in 2014, the law limits annual deductibles, copayments, and other types of cost sharing to no more than $6,350 for an individual and $12,700 for a family. Under the law, a single cap applies even if the insurer uses different entities to manage different benefits, such as a pharmacy benefits manager. Insurers are responsible for aggregating all of a consumer’s costs and ensuring they do not pay additional out-of-pocket costs beyond the cap.
Now, some insurers will have an extra year to comply with the terms of the law. The Obama Administration noted that insurance companies that use different computer systems and companies to administer benefits needed additional time to bring their systems into compliance with the law. During the one-year grace period, these insurers may continue to maintain separate caps, meaning that consumers could pay up to $6,350 for doctors’ visits and inpatient care and an additional $6,350 for prescription drug benefits. In addition, insurance companies that do not already maintain out-of-pocket limits for drug coverage will not be required to do so until 2015.
It was not immediately clear how many consumers would be affected by the delay. According to an Obama Administration official, all of the plans offered to individuals and small employers in the new insurance marketplaces will have the single aggregate limit in 2014 with no delays in the cost-sharing protections. A recent survey conducted by the Kaiser Family Foundation found that only 2% of employer-sponsored health plan enrollees are in plans with higher than a $6,000 cap – but most enrollees are in plans that do not count out-of-pocket prescription drug costs toward the cap. The Affordable Care Act’s cap does not apply to grandfathered plans – those that have not substantially changed since the law’s passage in 2010. Currently, about 48% of enrollees in employer-sponsored insurance are in grandfathered plans, although that number is expected to dwindle over time.
The one-year delay was made public in February but went largely unnoticed until this week. It is the second major provision of the law that has been delayed; earlier this summer, the Obama Administration announced a one-year delay in the law’s employer mandate.