Small Group maximum deductible eliminated

By Ronald E. Bachman, Chairman, Editorial Advisory Board, The Institute for HealthCare Consumerism

Who: Non-grandfathered plans in the small group market no longer have to comply with the deductible limit of the original Patient Protection and Affordable Care Act (PPACA).

When: On April 1, 2014, the Protecting Access to Medicare Act of 2014 was signed into law. It included a provision that eliminated – retroactive to March 23, 2010, the effective date of PPACA – the maximum deductible allowed for small group plans.

What: The new legislation eliminates the ACA’s annual limitation on deductibles for non-grandfathered plans in the small group market. However, the deductible is still included as part of the annual maximum out-of-pocket (MOOP) limit. The original law required the patient cost-sharing features – deductible and MOOP limits – to be inflation adjusted annually. The annual cost-sharing limit and the annual inflation adjustment will still apply to the MOOP limit.

Executive Summary: The retroactive elimination of small group deductible limits will allow small employers more flexibility in designing and selecting high deductible health plans. In particular, employers will have more options to offer affordable account based plans, such as those with health reimbursement arrangements (HRAs), health savings accounts (HSAs) and flexible spending accounts (FSAs).

Small employer health plans that started their 2014 plan years were required to incorporate the ACA’s annual deductible limit, unless a higher limit applied due to the actuarial value exception. Plan preparing for 2015 renewals will not have to comply with the original law’s planned deductible limits.

Small employer plans that have not started their 2014 plan year can now avoid the original law’s deductible limit. However, they need to continue to comply with the Annual Maximum Out-of-Pocket Limits.

Actions: Employer plan sponsors should consult with their insurer, agent, broker, plan consultant, legal counsel or human resources department to assure they are in compliance with the new law. Plans can now consider lower-cost high deductible plans – with or without account-based options.

The information presented and contained within this article was submitted by Ronald E. Bachman, Chairman of The Institute for HealthCare Consumerism’s Editorial Advisory Board and president and chief executive officer, Healthcare Visions. This information is general information only, and does not, and is not intended to constitute legal advice. You should consult legal advisors to determine the laws and regulations applicable to your plan. Any opinions expressed within this document are solely the opinion of the individual author.