EMBEDDED INDIVIDUAL OUT OF POCKET
New rules for people with family health coverage impacts people differently.
Effective Jan 1, 2016, non-grandfathered health plans cannot allow any individual, including those with family coverage, to spend more than the individual out-of-pocket (OOP) maximum established under the Affordable Care Act (ACA). Commonly referred to as an embedded individual OOP maximum, this rule could impact a family’s total health care expenses, especially if only one family member incurs high medical expenses. The 2020 ACA OOP maximum amounts are $8,150 for an individual and $16,300 for a family.
How it works
- Once an individual with family coverage meets the individual OOP maximum, the plan must pay 100% of all covered expenses for that person, even if the family maximum has not been met.
- Once the family OOP maximum is reached the plan must pay 100% of all covered expenses for every covered individual — regardless of whether each family member has reached the individual maximum.
Considerations for Health Savings Account (HSA) plans
HSA-compatible high-deductible health plans (HDHPs) need to follow additional Internal Revenue Service (IRS) rules for OOP maximums. Those rules:
- Require deductible thresholds to be met before a plan begins to pay coinsurance
- Thresholds are set for 1) self-only coverage for individuals, and 2) family coverage for an entire family, including any covered individuals
- Allow a separate individual deductible that is at least as high as the minimum family deductible threshold
- Learn more about cost-sharing limits.