New ACA Guidance Has Some Employers Re-thinking Their Health Plans
The DOL’s latest FAQ No. 27 on Obamacare has handed down the word on Embedded vs. Non-Embedded family health plans and is causing a lot of employers to re-examine their 2016 health plans.
In 2016, new out-of-pocket limits will take effect for non-grandfathered health plans.
The single coverage limit rises to $6,850, and the family coverage limit climbs to $13,700.
If you currently use a high deductible plan you were probably already aware of this upcoming change. But, here’s something you may not have already known — the $6850 limit will apply to every individual under your plan. Doesn’t matter whether a person is enrolled in family coverage or not.
The “Embedded Rule”
Medical Plans – Embedded vs. Non-embedded for family coverage
Embedded: Each individual has their own out-of-pocket limit plus a family deductible
Non-embedded: Must reach the entire family deductible before plan shares in cost
Example: Family of four with $6,500 individual/$13,000 family deductibles, then 100% paid by plan
Embedded:#1 incurs a $10,000 expense…. Individual incurs $6,500, plan pays $3,500
#2 incurs a $2,000 expense….individual pays $2,000, plan pays $0
#3 incurs a $1,000 expense…individual pays $1,000, plan pays $0
Non-embedded: (no individual deductible, only family deductible applies)
#1 incurs a $10,000 expense…individual incurs $10,000, plan pays $0
#2 incurs a $2,000 expense…individual pays $2,000, plan pays $0
#3 incurs a $1,000 expense…individual pays $1,000, plan pays $0
Total expenses = $13,000
Type of Deductible | Employee Cost | Plan Cost |
---|---|---|
Embedded Cost | $9,500 | $3,500 |
Non-embedded Cost | $13,000 | $0 |
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