Does out-of-pocket delay actually apply to you?
Yet another Affordable Care Act delay is in the spotlight: limits on out-of-pocket spending.
According to the law, starting in 2014, health plan participants will be spending no more than $6,350 in total out-of-pocket costs for individuals and $12,700 for family plans. That cap on out-of-pocket spending has been delayed until 2015, however, if an employer is using two separate vendors for its medical and pharmacy benefits. Sandy Ageloff, southwest health & group benefits leader for Towers Watson, says the rule only applies “to nongrandfathered plans” and emphasizes that the delay only applies to those who split their services.
“So the biggest piece of the legislation,” Ageloff says, “is that compliance is still required for Jan. 1, 2014 if the benefit plan – whether it’s a self-funded employer plan or a fully insured carrier program – is using a single vendor for the administration of both medical and pharmacy. The nuance comes in when you have multiple vendors, you get a one-year deferral in total compliance. You still have to comply in pieces, but you don’t have to comply in total.”
The number of plans that maintain their grandfathered status in the face of ACA continues to shrink, but Ageloff estimates that 35% or 40% of large employers use different vendors and thus have the extra year. Complicating things, she says, is that “a number of carriers actually have, behind the scenes, carved out that relationship with a pharmacy vendor,” so two can masquerade as one. Figuring out compliance may require more than just a phone call to your provider.
“For example, if you look at Anthem Blue Cross Blue Shield, they have a subcontracted relationship with ESI to manage their pharmacy benefits,” Ageloff says. “Same is true of a lot of other broad-based medical insurance carriers. So the health plans themselves are taking different interpretations on whether the full mandate for 2014 applies to them, or if they get the deferral. So that’s complicating this. As an employer, if I say, I use Anthem BCBS as either my [third-party administrator] or I’m buying an insured product from them, I’m relying on them to tell me how they interpret their own program. So that’s creating some challenges, particularly for self-funded employers who control their own plan design.”
The National Business Group on Health Vice President of Public Policy Steve Wojcik says, like the employer mandate delay, the out-of-pocket postponement was done to allow systems to catch up to what is required of them in terms of processing and accounting. And, like the employer mandate delay, he says it’s good news.
“It means that employers and their plans have another year to consolidate and coordinate,” Wojcik says. “In many cases the issue is that the PBM handles the pharmacy benefit separately and the medical expenses are handled through the health plan, so a lot of times their systems don’t talk with one another, and then the patient or plan member doesn’t have up-to-the-minute information on where they stand toward their out-of-pocket limit.”
Wojcik says “by and large, most people don’t approach their out-of-pocket limits in a year, so for most people, it’s not going to affect them.” For those who do – usually those with chronic conditions or highly expensive pharmacy needs or both – “it will just be another year before they get relief.”
Find more of Ageloff and Wojcik’s thoughts on the out-of-pocket delay in the October issue.