DOL Limits Out-Of-Pocket Medical Costs for Individuals in Family Plans, May Restrict Ability to Narrow Provider Networks

May 29, 2015

Rising concern over the affordability of health care prompted the Labor Department to issue new guidance this week clarifying that the maximum self-only limit for out-of-pocket expenses in self-insured and large group health plans must be applied to individuals enrolled in family plans.  Generally under IRS rules, where a high deductible health plan offers self and family coverage, the out-of-pocket maximum for self-only coverage is not applied for individuals who are enrolled in family coverage.  For example, if the self-only coverage out of pocket maximum is $6,000, and the family maximum is $12,000, the plan would not pay at 100 percent until the family maximum is met, even if that means all of the costs are attributable to one individual.  However, in February an HHS rule required plans sold on the ACA exchanges to have a separate individual out-of-pocket limit for each family member in addition to an overall family out-of-pocket limit.  The new DOL guidance extends the HHS rule to self-insured and large group plans beginning in 2016.  Under the new interpretation, an employer plan would violate the ACA unless it applied an out-of-pocket limit no higher than $6,850 to each individual enrolled as part of a family and, in addition, applied an overall out-of-pocket limit to the family no higher than $13,700.  The new DOL guidance also revokes previous guidance that stated employer plans are not required "to accept all types of providers into a network," and notes that "until further guidance is issued" plans are required to use a "good faith, reasonable interpretation" of conflicting statutory language that prohibits plans from discriminating against health care providers, but does not require plans to contract with providers that are willing to abide by the terms and conditions of the plan.