One of the reasons President Obama’s signature health law was titled the Affordable Care Act is it was supposed to limit the out-of-pocket costs people could potentially have to shell out for medical care. Well, now that’s not going to happen as planned.
In 2014, the reform law was supposed to cap out-of-pocket health insurance expenses at $6,350 for an individual and $12,700 for families — period.
But now that’s not going to happen until at least 2015.
With the delay in place, many insurers can now maintain separate out-of-pocket limits for benefits in 2014.
Example: A family could end up paying $12,700 in deductibles and co-pays for hospital care under a major medical plan and another $12,700 in prescription drugs under a drug plan.
Of course, that’s an extreme example, but it helps illustrate the reason for the delay.
This is just the latest in a list of Obamacare delays that already includes:
- pushing off enforcement of the employer mandate requiring large employers to provide full-time employees with insurance, and
- suspending the Small Business Health Options Program (SHOP) mandate that required health exchanges to provide small businesses with multiple plan options in the 33 state exchanges run by the federal government.
What happened?
As it was originally written, the reform law would’ve established a single overall out-of-pocket limit for individual and family coverage under a health plan. So if a plan used one company to offer major medical coverage and another to offer prescription drug coverage, the out-of-pocket costs for both sets of coverage combined couldn’t exceed the $6,350 and $12,700 limits.
The problem is for plans that use different companies to administer different parts of their plans (like a major medical plan and a drug plan), the computer systems of those administrators can’t communicate with each other to know when the combined out-of-pocket limit has been reached.
So the feds are giving employers and insurers another year to get their systems configured properly.
The delay has been posted on the DOL’s website since February, but largely went unnoticed until now because it was buried within the bureaucratic language of an FAQ. (A tip of the hat to The New York Times for bringing it to our attention.)
Similar to smoking ‘glitch’
This is not the first time a computer glitch has resulted in reform law implementation problems.
In July, we reported that due to a problem with the government’s computer system, some health plans may not be able to impose the full 50% premium surcharge on smokers that’s allowed under Obamacare.
The surcharge conflicts with another requirement under the law, one that states insurers can’t charge older customers more than three times what they charge the youngest adults in the pool.
A problem can develop when older participants in a plan are close to paying nearly three times what the youngest people in the plan are charged. A smoking surcharge in this case could push the older participants over that 300% threshold, and the government’s computer system wouldn’t allow that to happen.
As a result, plan sponsors and insurers can still levy a surcharge against smokers, but they must make sure it abides by the 300% rule.
This post originally ran our our sister website, HRBenefitsAlert.com.
