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Smart Benefits: New Law Eliminates Limits on Deductibles

Monday, April 07, 2014


Another piece of the healthcare reform law – deductible limits for small group plans – has been repealed.

On April 1, 2014, the Protecting Access to Medicare Act of 2014 (the Act) was enacted. Section 213 of the Act contains a provision that eliminates the limitation on deductibles for employer-sponsored health plans, which was part of the Affordable Care Act (ACA).

Limits Drove Costs

Earlier this year, non-grandfathered, small employers were forced to change their plan design deductibles effective for January 1 coverage if their deductibles were $2,000 (self-only) or $4,000 (other than self-only), or higher. As a result, many employers had to terminate plans previously in effect and adopt new ones – often with higher premium costs for employers and employees, who previously had higher deductibles in exchange for lower premiums.

The limit on deductibles was also problematic for those small employers who offered higher deductible plans in tandem with health reimbursement arrangements (HRAs) to legally reimburse partial deductible expenses for employees.

Change Means More Flexibility

Now, because the deductible limits have been repealed, employers will once again have more flexibility with the plan designs they offer. That means they can eliminate deductibles, or set deductible limits at any level below the plan’s out-of-pocket maximum (OOPM), as long as they are allowed under state laws and regulations.

Other Limits Remain

However, some limits on plans sold after January 1, 2014, will remain:

· The annual limits on a plan’s out-of-pocket maximum ($6,350 for self-only coverage and $12,700 for other than self-only coverage) are still in effect

· The requirement that all in-network cost sharing (including deductibles and flat dollar copayments) must accumulate to the plan’s OOPM remains in effect.

Amy Gallagher has over 21 years of healthcare industry experience guiding employers and employees. As Vice President at Cornerstone Group, she advises large employers on all aspects of healthcare reform, benefit solutions, cost-containment strategies and results-driven wellness programs. Amy speaks regularly on a variety of healthcare-related topics, and is often quoted by national publications on the subject matter. Locally, Amy is a member of SHRM-RI, the Rhode Island Business Group on Health, and the Rhode Island Business Healthcare Advisory Council.


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