by admin | Sep 5, 2024 | Blog
When considering design changes to a self-insured group health plan, it’s crucial to understand the regulations surrounding annual dollar limits on benefits. Specifically, group health plans and insurers are prohibited from establishing annual limits on the dollar amount of essential health benefits for any individual. This means that your plan cannot be amended to impose a $1.5 million annual dollar limit on benefits.
Key Points to Consider
- Prohibition of Annual Limits:
- Since January 1, 2014, group health plans cannot impose annual dollar limits on essential health benefits.
- Essential health benefits include categories such as emergency services, hospitalization, and prescription drugs.
- Permissible Limits:
- While annual dollar limits on essential health benefits are prohibited, limits can be imposed on specific covered benefits that are not considered essential health benefits.
- These limits must comply with other federal and state laws.
- Definition of Essential Health Benefits:
- Essential health benefits encompass a range of categories and services within those categories.
- Self-insured health plans and insured plans in the large group market are not required to cover all essential health benefits but cannot impose annual dollar limits on those they do cover.
- Flexibility in Defining Essential Health Benefits:
- Group health plans not required to cover all essential health benefits have the discretion to define these benefits for the purpose of the dollar-limit prohibition.
- This definition is generally based on any state benchmark plan.
Understanding these regulations is vital for ensuring compliance and making informed decisions about your self-insured group health plan. While you cannot impose an annual dollar limit on essential health benefits, there is flexibility in defining these benefits and imposing limits on non-essential benefits within the bounds of federal and state laws.
Source: Thomson Reuters
by Lexi Garcia | Feb 15, 2024 | Blog
QUESTION: Our group health plan uses a copay accumulator program that does not count drug manufacturers’ financial assistance toward participants’ cost-sharing limits. We’ve heard that the agencies have restricted the use of these programs. Can we continue to exclude drug manufacturers’ coupons from cost-sharing?
ANSWER: The guidance in this area is in flux, and it is currently uncertain whether your plan may continue to exclude drug manufacturers’ coupons from cost-sharing using a “copay accumulator” program. To review, prescription drug manufacturers sometimes offer financial assistance to individuals for certain drugs to help defray costs that might otherwise be an impediment to obtaining the drug. Traditionally, this financial assistance reduced the participant’s cost-sharing under the plan. That is, the drug manufacturers would cover all or a portion of the participant’s deductible and copayment or other required cost-sharing under the plan (sometimes up to a specified dollar amount), and the manufacturers’ payments would count toward the participant’s satisfaction of the plan’s deductible and cost-sharing limit. Under a copay accumulator program, however, the drug manufacturers’ financial assistance does not count toward the plan’s deductible and cost-sharing limits. This can result in cost savings to the plan because more of the financial burden is placed on participants and drug manufacturers.
Plan sponsors must ensure that their copay accumulator programs do not violate the requirement that plans adhere to an established annual cost-sharing limit with respect to essential health benefits. Beginning in 2021, HHS regulations permitted, but did not require, plans and insurers to count drug manufacturers’ assistance toward the cost-sharing limit. However, in 2023 a court vacated the applicable provision in the regulations. This effectively revives a potential conflict that the vacated regulations were intended to address. Earlier HHS guidance had stated that manufacturers’ assistance need not be counted toward a plan’s annual cost-sharing limit when a medically appropriate generic equivalent was available, which some stakeholders viewed as implying that manufacturers’ assistance must be counted absent a medically appropriate generic equivalent. However, this interpretation potentially conflicts with the rules for high-deductible health plans (HDHPs), under which only amounts actually paid by the individual (i.e., not manufacturers’ assistance) may be taken into account when determining whether the HDHP deductible is satisfied.
Source: Thomson Reuters
by Lexi Garcia | Jun 30, 2023 | Blog
In response to the end of the COVID-19 emergency, the IRS has issued a notice modifying its 2020 guidance regarding the COVID-19 testing and treatment benefits that can be provided by a high-deductible health plan (HDHP). Under the 2020 guidance, HDHPs can provide those benefits without a deductible or with a deductible below the applicable HDHP minimum deductible (self-only or family), thereby allowing individuals to receive coverage under HDHPs that provide such benefits on a no- or low-deductible basis without any adverse effect on HSA eligibility. Agency FAQs issued earlier this year indicated that the 2020 guidance would apply until further guidance was issued. This latest notice provides that, due to the end of the COVID-19 emergency, the relief described in the 2020 guidance is no longer needed and will apply only for plan years ending on or before December 31, 2024.
The notice also addresses the status of certain items and services as preventive care under the Code’s HSA eligibility rules. According to the notice, the preventive care safe harbor under those rules does not include COVID-19 screening (i.e., testing), effective as of the notice’s publication date. The notice acknowledges that the preventive care safe harbor includes screening services for certain infectious diseases but also observes that screenings for “common and episodic illnesses, such as the flu” are not included and concludes that COVID-19 differs from the types of diseases on the list. The notice further provides that—consistent with recent agency FAQs regarding the impact of the trial court’s decision in the Braidwood case—items and services recommended with an “A” or “B” rating by the United States Preventive Services Task Force (USPSTF) on or after March 23, 2010, are treated as preventive care under the HSA eligibility rules, whether or not they must be covered without cost sharing under the preventive services mandate. Thus, if the USPSTF were to recommend COVID-19 testing with an “A” or “B” rating, then that testing would be treated as preventive care under the HSA eligibility rules, regardless of whether coverage without cost-sharing is required under the preventive services mandate.
Source: Thomson Reuters
