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Feds stick with stricter out-of-pocket health care spending limits

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Federal regulators confirmed Tuesday that they will not back off from an earlier “clarification” of health care reform law rules that, starting next year, place new limits on how much in out-of-pocket expenses employers with high-deductible plans can require employees to pick up.

Under that regulatory guidance, jointly issued in May by the U.S. departments of Health and Human Services, Labor and Treasury, the maximum out-of-pocket expenses employers can require employees to pay before health plan coverage kicks in will be $6,850 for single coverage and $13,700 for family coverage when the rules go into 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 any 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.

Several business groups earlier wrote to federal regulators that such an “embedded” cost limit was not supported by the health care reform law.

But in a letter sent Tuesday to those groups, federal regulators said they are sticking with the new requirement.

That embedded limit “prevents consumers from being penalized for purchasing family coverage rather than self-only coverage,” Kevin Counihan, CEO of the health insurance marketplace at HHS, wrote to the groups.

Business groups said they were disappointed that regulators declined to withdraw the rule.

“Last-minute rule changes, especially those done without compliance with the Administrative Procedure Act, make it very difficult for employers to provide their workers with the best possible information and health plan options,” Annette Guarisco Fildes, president and CEO of the Washington-based ERISA Industry Committee, one of the business groups that received the HHS letter, said in a statement.

“We were hopeful that the Administration would reconsider their position on out-of-pocket limits in light of the harm this does to group health plans and the millions of workers and family members covered by them. This position will force many companies to raise premiums to offset this required plan design change,” Ms. Fildes added.

The biggest impact of the new cost-sharing rules will be on employers with high-deductible plans. For example, an earlier Aon Hewitt survey found that just 17% of large and midsize employers offering high-deductible health care plans with health savings accounts had an embedded out-of-pocket limit.