Federal officials have granted a one-year grace period to some insurers, allowing them to have higher limits, or no limit at all, on out of pocket expenses which were supposed to be limited by PPACA in 2014. PPACA stated limit on out-of-pocket costs, including deductibles and co-payments, was not to exceed the following annual caps:

  • $6,350 for an individual
  • $12,700 for a family

While voluntary compliance is encouraged, with the grace period, many group health plans will stall compliance for another year. In fact, many group health plans will be able to maintain separate out-of-pocket limits for different categories of benefits in 2014. For example, an employee may have one out of pocket limit for physician services and hospital care, and a separate out of pocket limit for prescription drugs under a plan administered by a pharmacy benefit manager. Further, if a drug plan does not currently have an out of pocket maximum, there will be no requirement to impose one in 2014.

Responding to industry pleas for more time to comply, federal officials said that many insurers and employers needed more time because they used separate companies to help administer major medical coverage and drug benefits. In many cases, the companies have separate computer systems that cannot communicate with one another.

The grace period on these limits has been posted, though largely unpublicized, on the Department of Labor’s website since February 2013. A more public one-year postponement of the Employer Play or Pay mandate emerged several weeks ago. Both delays underscoring the difficulties the government has faced in rolling out a full scale version of “Obamacare,” a term the President himself has embraced, in the year 2014.

While the out of pocket maximum one year “grace period” may not seem like much to many health plans, particularly richer plans of employers typically found in the Northeast or on the West coast, for people with serious illnesses like cancer and multiple sclerosis out-of-pocket costs can undoubtedly total tens of thousands of dollars a year. Further, according to the American Cancer Society some new cancer drugs cost $100,000 a year or more!

Even though federal officials are offering transition relief to certain health plans in 2014, they said, by 2015, health plans must comply with the law and must have an overall limit on out-of-pocket costs for medical, drug and other benefits combined.

For more information on the delayed provisions of PPACA, contact your Client Executive at WGA. For continued updates on PPACA, please visit our website frequently at www.wgains.com.