ACA News & Publications

ACA Pathways: 2021 Out of Pocket Maximum Cost Sharing Limits Announced

May 15, 2020

On May 14, 2020, the Department of Health and Human Services (HHS) published its final rule, the HHS Notice of Benefit and Payment Parameters for 2021 (Final Rule) that describes the benefit and payment parameters under the Affordable Care Act (ACA) that apply for the 2021 benefit year. A summary fact sheet was also released. While most of the standards included in the Final Rule are directed to health insurers and Marketplace regulators, there are some provisions of interest to employers. The following is a brief summary of these provisions.

Annual Limits on Cost Sharing

The ACA requires non-grandfathered plans to comply with an overall annual limit, or an out-of-pocket maximum, on essential health benefits. For 2021, the out-of-pocket maximum will increase to $8,550 for self-only coverage and $17,100 for family coverage. This is an increase from the 2020 limits of $8,150 and $16,300, respectively.

Drug Manufacturer Coupons

Under a new policy, to the extent it is consistent with State law, health insurance issuers may (but are not required to) count amounts paid by drug manufacturers to enrollees for specific prescription drugs toward a health plan’s annual costsharing limit. This is a change from the requirement contained in the 2020 Notice of Benefit and Payment Parameters, which had generated a lot of confusion.

In addition, effective with the 2022 medical loss ratio (MLR) reporting year (MLR Reports filed in 2023), MLR regulations will require insurers to deduct from incurred claims, prescription drug rebates and price concessions received and retained by them, or by any entity providing pharmacy benefit management services to them.

Individual Mandate's Affordability Exemption

For an individual age 30 or over to qualify for a hardship exemption to enroll in catastrophic coverage in the Marketplace, the lowest-cost, self-only medical plan coverage offered by his or her employer may not exceed 8% of household income, adjusted annually. The final Rule provides that, for 2021, the affordability threshold will increase to 8.27%, a slight increase from the 2020 percentage of 8.24%.

For More Information
For more information about this ACA Pathways or about any other health care reform-related provisions, please contact your Burnham Benefits consultant or Burnham Benefits at:

Burnham Benefits

Burnham Benefits does not engage in the practice of law and this publication should not be construed as the providing of legal advice or a legal opinion of any kind. The consulting advice we provide is intended solely to assist in assessing its compliance with the Patient Protection and Affordable Care Act and other applicable federal and state law requirements, and is based on Burnham Benefit’s interpretation of federal guidance in effect as of the date of this publication. To the best of our knowledge, the information provided herein, and assumptions relied on, are reasonable and accurate as of the date of this publication. Furthermore, to ensure compliance with IRS Circular 230, any tax advice contained in this publication is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.

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