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Small Health Plan Annual Deductible Limit Repealed: Alltrust Alert

On April 1, 2014, President Obama signed the Protecting Access to Medicare Act of 2014 (Act) into law. The Act's main provisions preserve the pay rate for physicians treating Medicare patients, and delay the compliance deadline for converting to the updated International Classification of Diseases codes for at least one year.

Some Quick Facts:

  • For 2014 plan years, small group health plans were subject to annual deductible limits.
  • A new law repeals the ACA's annual deductible limit, effective retroactively.
  • The repeal of the deductible limit does not affect the out-of-pocket maximum.
  • The repeal of the deductible limit will allow small employers to offer health plans with higher deductibles.

Annual Deductible Limit Repealed

The Act also eliminates the Affordable Care Act's (ACA) annual deductible limit that applied to health plans in the small group market. This change is retroactively effective to when the ACA was enacted in March 2010.

The Act does NOT eliminate the ACA's out-of-pocket maximum, which applies to all non-grandfathered health plans for years beginning on or after January 1, 2014.

The repealed annual deductible limit will provide small employers with more flexibility to control premium costs by selecting a health plan with a higher deductible. However, the out-of-pocket-maximum, which includes the deductible amount, and the ACA's actuarial requirement for small health plans will continue to limit enrollee cost-sharing in small employer plans. 

Small employer health plans that have started their 2014 plan years (for example, calendar year plans), were already required to incorporate the ACA's annual deductible limit, unless a higher limit applied due to the actuarial value exception. It is not likely that these plans will be affected by the repeal of the ACA's deductible limit until their 2015 plan years.

However, small employer health plans that have not started their 2014 plan years (for example, health plans with a November 1st to October 31st plan year) may be able to avoid the ACA's deductible limit altogether. To read more, click here for the full article. 

For assistance navigating Healthcare Reform, contact Alltrust Compliance Experts at 727.772.7200 or visit www.alltrustinsurance.com