Changes Coming to Out-of-Pocket Maximums in Family Plans
A federally mandated health plan change coming in 2016 could save some families hundreds or even thousands in out-of-pocket medical costs. However, the change in how out-of-pocket maximums are set was only clarified by the government in the first half of 2015. That late-breaking guidance has insurers and some employers scrambling to make changes in time. And, of course, the change in coverage could affect how much families pay for their plans next year.
First, a quick explanation of out-of-pocket maximums.
Almost all health plans today offer members the protection of an out-of-pocket maximum. That’s the most an individual member or a family will have to pay out of their pocket in a year in deductibles and coinsurance or copays. Specifically, the maximum applies to care you get in the health plan’s network for what’s considered Essential Health Benefits. After that maximum is hit, the health plan pays the allowed amount for all covered services.
The government sets a limit on how much these maximums can be. Family health plans can have a single out-of-pocket maximum for the family. Family maximums can be twice as high as the maximum amount in a plan covering just one person (a “self-only plan”). For 2016, the self-only maximum can be up to $6,850 and the family maximum, up to $13,700. For high-deductible plans that are compatible with Health Savings Accounts they are lower, up to $6,550 and $13,100.)
Up until now, plans could count all family members’ bills until the family maximum was reached. Then they would start covering everyone’s in-network care in full.
Next year, that changes. Here’s how.
In 2016, no matter whether a plan covers just you (self-only) or you and a spouse or you and your kids, or your spouse AND kids, there is a limit on how much one person can be required to spend. Plans can’t require any one person to pay more than the maximum amount for self-only coverage.
So in a family health plan, if one family member’s covered bills hit the self-only limit, the plan must cover that person’s allowed bills in full for the rest of the year. The other family members will continue to pay deductibles and coinsurance or copays until one of them also reaches the self-only maximum, or the family maximum is reached.
Some plans are already set up this way. Others will have to change. The change affects plans that cover an individual and a spouse and/or dependents.
For next year, family plans can be set up one of two ways:
- With a family maximum that is no more than the maximum for self-only coverage
- With a higher family maximum but with an individual maximum “embedded” in the plan too. Once one person’s allowed bills reach the self-only maximum, his or her bills are covered in full for the rest of the year. Other family members will continue to pay their share of their bills until one of them also reaches the self-only maximum, or the family maximum is reached.
For a family where one person has the majority of the medical bills, this change could represent thousands of dollars in out-of-pocket savings in 2016. However, this enhanced coverage could come at a price. Insurers have to calculate how much more this enhanced coverage will cost, and set prices accordingly.