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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