3
coverage other than self-only coverage. For plan or policy years beginning after 2014, the
annual limitation on out-of-pocket costs is increased by the premium adjustment percentage
described under Affordable Care Act section 1302(c)(4).
A previous FAQ provided guidance on out-of-pocket maximums for the first year of
applicability where a group health plan or group health insurance issuer utilizes more than one
service provider to administer benefits that are subject to the annual limitation on out-of-pocket
costs.
7
This guidance generally provided that, for group health plans and group health insurance
issuers that utilize more than one service provider to administer benefits that are subject to the
annual limitation on out-of-pocket costs, only for the first plan year beginning on or after January
1, 2014 (first year of applicability), the Departments will consider the annual limitation on out-
of-pocket costs to be satisfied if:
The plan complies with the requirements with respect to its major medical coverage
(excluding, for example, prescription drug coverage and pediatric dental coverage); and
To the extent that the plan or any health insurance coverage includes an out-of-pocket
maximum on coverage that does not consist solely of major medical coverage (for
example, if a separate out-of-pocket maximum applies with respect to prescription drug
coverage), that out-of-pocket maximum does not exceed the dollar amounts set forth in
section 1302(c)(1) of the Affordable Care Act.
Q2: After this first year of applicability, are plans and issuers subject to PHS Act section
2707 required to apply the out-of-pocket maximum across all essential health benefits?
Yes. For plan years beginning on or after January 1, 2015, non-grandfathered group health plans
and group health insurance coverage must have an out-of-pocket maximum which limits overall
out-of-pocket costs on all essential health benefits (EHB). Because cost-sharing limits in section
1302(c) of the Affordable Care Act apply only to EHB, plans are not required to apply the annual
limitation on out-of-pocket maximums to benefits that are not EHB. To determine which
benefits are EHB for purposes of complying with PHS Act section 2707, the Departments will
consider self-insured group health plans or large group health plans to have used a permissible
definition of EHB under section 1302(b) of the Affordable Care Act if the definition is one that
is authorized by the Secretary of HHS.
8
Furthermore, the Departments intend to use their
enforcement discretion and work with large group market and self-insured plans that make a
good faith effort to apply an authorized definition of EHB. This approach is consistent with the
7
See Affordable Care Act Implementation FAQs Part XII, Q2, available at http://www.dol.gov/ebsa/faqs/faq-
aca12.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs12.html.
Transition relief is applicable only for the first plan year beginning on or after January 1, 2014.
8
The list of the authorized plans for purposes of determining EHB for the large group market and self-funded plans
is found at 45 CFR 156.100. See also Frequently Asked Questions on Essential Health Benefits Bulletin, Question
10 (February 17, 2012), available at: www.cms.gov/CCIIO/Resources/Files/Downloads/ehb-faq-508.pdf. (For the
list of base-benchmark plans adopted by the States for use by non-grandfathered health insurance coverage in the
individual and small group markets, see Patient Protection and Affordable Care Act; Standards Related to Essential
Health Benefits, Actuarial Value, and Accreditation, 78 FR 12834 (February 25, 2013), Appendix A: List of
Essential Health Benefit Benchmarks. For policy documents containing additional details about the base-benchmark
plans, see the National Association of Insurance Commissioners website, available at:
http://www.naic.org/index_health_reform_section.htm.)