Last week, the New York Times reported another apparent hiccup in the rollout of the Affordable Care Act. One of Obamacare’s major selling points -- a delay in putting an annual limit on the total out-of-pocket expenses that health care consumers would have to pay. The headline provoked anger across the political spectrum. On the left, it was seen as a weakening of promised benefits; on the right, as another sign that the wheels were falling off the Obamacare Express.
In fact, it was old news. The delay had already been announced -- albeit in a very under-the-radar FAQ on the Department of Labor’s website -- back in February. More than that, for business owners it represents either no change at all, or a welcome reprieve.
What it's all about
Let’s start at the beginning. Obamacare limits the amount that health insurance policy holders should have to pay out of their own pockets. Individuals are promised they won’t have to pay more than $6,350 of their own money for health care per year; families have a limit of $13,700.
The out-of-pocket maximum is supposed to apply across all of an employees’ health plans, even if your plan uses separate insurers or administrators for medical, prescription-drug, and other discrete benefits like vision and dental, each with its own separate out-of-pocket limit. The problem is, the law didn’t leave employers enough time to figure out how to track their employees’ spending across separately administered plans. So the delay gives you and your insurer time to figure all this out.
From a consumer perspective, it’s not great news. If your plan is organized in separate parts, your workers could be responsible for up to $6,350 in out-of-pocket costs for doctors and hospital care, plus an additional $6,350 for prescription drugs next year. Some workers may have to pay even more -- if your pharmacy plan doesn’t already have a limit on out-of-pocket costs, it won’t have to impose one at all until 2015. For employees with chronic conditions that require expensive medications, who would have been most helped by the new combined limit, the delay is particularly painful, although it leaves them no worse off than they were before.
What it means to business owners
But from your point of view, it’s mainly a non-issue. If your health plan isn’t administered in separate parts, you have to comply with the Obamacare out-of-pocket limits in 2014, just as you already expected to. But you may already do that. “A good number of employer plans already have a maximum out of pocket limit at or below the level that was set for 2014,” says Paul Ashley, a benefits expert with First Person Advisors in Indianapolis.
If you do have separately administered plans, the delay is a nice break. In addition to putting off the administrative headaches of consolidating plans, you don’t have to lower your out of pocket maximums if they were higher than those dictated by the law. That can save you on premiums.
So, if anything, your company may have to spend less than you thought on health benefits next year. But, says Ashley, “the larger issue of all of these delays is that they add a layer of confusion to an already complex set of regulations. So much time and money is being wasted in the way all of us are having to work to implement the ACA.” Amen to that.