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Out-of-Pocket Maximums (In-Network)


The in-network out-of-pocket maximum is the annual limit on cost sharing that can be imposed on participants for their health coverage. Once a participant has paid cost sharing (deductibles, copays, and coinsurance) equal to the out-of-pocket maximum, the plan must pay 100% of that participant’s covered health expenses for the remainder of the benefit year. The out-of-pocket maximum, like the plan deductibles, reset at the start of a new benefit year.

 

Applicability

The requirements relating to in-network out-of-pocket maximums apply to non-grandfathered group health plans and issuers of group and individual health insurance coverage. The requirements do not apply to excepted benefit plans, retiree plans or plans which have retained grandfathered status.

 

Out-of-Pocket Maximums and Health Care Reform

Prior to health care reform, employers had the flexibility to choose which types of out-of-pocket costs applied towards the out-of-pocket maximum and which did not. However, the Affordable Care Act (ACA) now mandates that all deductible, copay, coinsurance and similar expenses for essential health benefits must apply towards the annual out-of-pocket maximum. However, non-covered expenses, such as costs for non-covered services, balance billing expenses and costs above reference price (in reference-based plan designs), do not need to apply to the out-of-pocket maximum. Premiums, out-of-network expenses, and expenses for non-essential health benefits also do not need to apply towards the out-of-pocket maximum.

 

Out-of-pocket limits are set by the federal government for non-grandfathered health plans, and are adjusted annually. For the 2017 year, the limits are set at $7,150 for single coverage and $14,300 for family coverage and for the year 2018, the limits will increase to $7,350 for single coverage and $14,700 for family coverage.

 

These limits apply for all non-grandfathered group health plans, except for HSA-qualified high deductible health plans. The IRS sets slightly different limits for these plans. For the 2017 year, the limits are set at $6,550 for single coverage and $13,100 for family coverage and for 2018 $6,650 for single coverage and $13,100 for family coverage.

 

Many plans utilize separate administrators for medical and prescription drug costs and, historically, set separate out-of-pocket maximums for these two types of benefits. Plans may continue to do this (known as the side by side method), but must ensure that the total amount of the separate out-of-pocket limits when combined together do not exceed the amounts listed above. Plans which do not utilize separate administrators will continue to have an integrated out-of-pocket maximum.

 

Out-of-Pocket Maximums at a Glance

 

​Plan Type ​

2016

​2017 ​ ​

2018​

​Single

​Family

​Embedded

​ ​Single

​Family

​Embedded

​Single

​Family

​Embedded

​Non-HDHP

​$6,850

​$13,700

​$6,850

​ ​$7,150

​$14,300

​$7,150

​$7,350

​$14,700

​$7,350

​QHDHP

​$6,550

​$13,100

​$6,850

​ ​$6,550

​$13,100

​$7,150

​$6,650

$13,300

​$7,350

 

Reference-based Pricing and Out-of-Pocket Maximum Requirements

More plans are now using reference-based pricing structures in efforts to save costs and steer members towards reasonably-priced providers. For these plans, regulators will not consider a plan or issuer as failing to comply with the out-of-pocket maximum requirements because it treats providers that accept the reference amount as the only in-network providers, provided the plan uses a reasonable method to ensure that it provides adequate access to quality providers.

 

Penalties

Plans that fail to comply with the In-Network Out-of-Pocket Maximums mandate will be subject to an excise tax of $100 per day per affected individual.

 

This content is being provided as an informational tool. It is believed to be accurate at the time of posting and is subject to change. It is recommended that plans consult with their own experts or counsel to review all applicable federal and state legal requirements that may apply to their group health plan. By providing this information, Meritain Health is not exercising discretionary authority or assuming a plan fiduciary role, nor is Meritain Health providing legal advice.