Login Register Subscribe
Current Issue

Employer groups wary of new out-of-pocket health maximums

Reprints

Employer groups voiced their support this week for congressional questioning of a potentially costly change to employee cost-sharing rules under the health care reform law.

The Republican chairmen of three House committees on Friday asked U.S. Health and Human Services Secretary Sylvia Burwell to justify federal regulators' recent “clarification” of health care reform rules that places new limits on how much employers — primarily those offering high-deductible health plans — can require employees to pay in out-of-pocket expenses.

Under that guidance, issued in May by HHS and the U.S. Labor and Treasury Departments, the maximum 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. The rules take effect in 2016.

However, the guidance also added a new and potentially expensive requirement for employers, who will have to cap at $6,850 the maximum out-of-pocket costs individual employees and dependents covered under a family plan can be required to pay before first-dollar coverage kicks in.

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.”

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.

“Our position is that we don't think the statute allows for this kind of interpretation,” Debbie Harrison, assistant director of public policy at the National Business Group on Health in Washington, said Tuesday.

The cost-sharing rules will hit employers with high-deductible plans hardest. 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.

“To get that guidance at such a late date, which basically means that employers have to redo their out-of-pocket limits for family coverage, is going to cause a pretty substantial scramble in order to comply,” Ms. Harrison said. “We were hoping that they would at least delay implementing the rule for a year, just to give employers time to make those adjustments, but we're not really sure that's going to happen.”

Annette Guarisco Fildes, president and CEO of the ERISA Industry Committee in Washington, said Friday that her organization was “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.”