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GOP lawmakers question HHS rules on out-of-pocket limits

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The Republican chairmen of three House committees are asking U.S. Health and Human Services Secretary Sylvia Burwell to justify a costly HHS “clarification” of health care reform law rules that places new limits on how much in out-of-pocket expenses employers with high-deductible plans can require employees to pay.

Under that guidance, issued earlier by the U.S. Health and Human Services, Labor and Treasury departments, the maximum out-of-pocket expenses employees can be required to pay before health plan coverage kicks in will be $6,850 for single coverage and $13,700 for family coverage, when the rules take effect in 2016.

In addition, the guidance adds a new and potentially costly requirement for employers, who will have to cap at $6,850 the maximum out-of-pocket expense an individual with family coverage — whether an employee or covered dependent — can be required to pay before family coverage kicks in.

Specifically, the $6,850 annual cap on how much a plan participant can be required to pay will apply regardless if the individual has single or family coverage.

An example illustrates how the HHS-imposed “embedded” limit on out-of-pocket expenses will work: An employer plan has a $10,000 out-of-pocket expense limit for employees with family coverage. An employee's spouse incurs $15,000 in medical care expenses. The spouse's out-of-pocket expense will be capped at $6,850, the same cost-sharing limit that would be imposed if the individual had single coverage.

The cost-sharing rules will hit employers with high-deductible plans hardest. For example, an Aon Hewitt survey found that just 17% of large and midsize employers offering high-deductible health care plans with health savings accounts had an out-of-pocket limit.

In their letter sent Friday, Reps. Paul Ryan, R-Wis., chairman of the House Ways and Means Committee; John Kline, R-Minn., chairman of the House Education and Workforce Committee; and Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee, asked what statutory authority Obama administration regulators have to set such caps. They also questioned why the policy change was made in the preamble, and not in the regulation itself.

The committee chairmen said they have “become increasingly concerned about agencies' actions to implement the law that appears to exceed the statutory authority delegated to them by Congress.”

In addition, “While HHS has termed this change to be a 'clarification,' the relevant statute is clear — these are two distinct and separate limits,” the lawmakers wrote.

Employer benefits lobbying groups say they welcome congressional questioning of the HHS cost sharing limit.

“We are pleased that Chairman Kline directly questioned Secretary Burwell about this issue at a recent hearing and that the three committees of jurisdiction are concerned about how this guidance was developed and whether its impact on employers and employees was properly considered,” said Annette Guarisco Fildes, president and CEO of the ERISA Industry Committee in Washington.