All health insurance policies sold this fall on Connecticut’s health exchange will have a cap on out-of-pocket spending, beyond which the insurer will cover medical expenses, the head of the exchange said Thursday.
A recent news report raised questions about how much some people would have to pay for medical services beyond their premiums in 2014, when a provision of the Affordable Care Act takes effect. The Connecticut health exchange, Access Health CT, on Thursday clarified circumstances in the state.
At issue is the maximum amount an individual or a family would have to pay out of pocket for medical services in co-pays, deductibles and co-insurance in addition to monthly premiums on policies sold this fall through the exchange, Access Health CT.
As part of the Affordable Care Act, federal officials require health policies next year to have a maximum out-of-pocket limit of $6,350 for an individual and $12,700 for a family. However, an exception to the rule surfaced in February.
The U.S. Department of Labor wrote in a question-and-answer document in February that a one-year grace period given to employers and insurers could effectively double or triple the out-of-pocket maximums. That Labor Department decision got a lot of attention after The New York Times published a front-page article on the subject Monday, though the issue surfaced earlier with less fanfare when it was reported in April by Kaiser Health News.
However, the maximum out-of-pocket spending limits still apply for all individual and small-group plans that will be available for sale starting Oct. 1 through Access Health CT, said Kevin Counihan, chief executive officer of the exchange. He held a conference call with media Thursday afternoon to clear up any confusion.
“It does not affect enrollees in the exchange, either on the individual side or on the group side,” Counihan said.
The Labor Department decision only affects people who have insurance through an employer that is self-insured and when the employer has separate contracts with insurers to manage medical coverage, pharmaceutical benefits and behavioral health benefits, for example, Counihan said.
Self-insured means the employer pays medical expenses and hires an insurer as a third-party administrator to establish a network of clinicians and hospitals. Many large employers are self-insured, though many also use large health insurers such as Aetna, Cigna or UnitedHealthcare as their third-party administrators. Those large insurers typically have integrated systems with separate pharmaceutical- and behavioral-benefits managers.
The Labor Department ruling comes into play when an employer hires a newer, or less connected, insurer as a third-party administrator. The problem of higher out-of-pocket costs for consumers could arise if multiple benefits administrators keep separate tallies of out-of-pocket expenses: one for medical coverage, another for drug coverage and a third for behavioral health.
For 2014, the Labor Department is allowing those health plans to have separate out-of-pocket maximums for medical coverage, pharmaceutical coverage and behavioral health. In effect, the decision could double or triple the maximum out-of-pocket cost under the Affordable Care Act — $6,350 for individuals and $12,700 for families — if insurers apply those caps for each coverage type.
The federal Labor Department got involved because it regulates self-insured companies, whereas the state Insurance Department regulates fully-insured plans, in which the insurer collects premiums and pays medical expenses.
It wasn’t clear Thursday how many employers — or workers — in Connecticut might be affected by the Labor Department decision.
“The announcement today from Kevin Counihan at Access Health CT that Connecticut’s new health insurance marketplace will not be affected by the latest delay with the Affordable Care Act certainly comes as a relief for the residents of our state,” said Frances G. Padilla, president of Universal Health Care Foundation of Connecticut, who also serves on the Governor’s Health Care Cabinet.
The delay, however, is a setback for those it affects.
“This postponement comes on the heels of the decision to delay enforcing the provision that requires large employers to offer health coverage to their full-time employees,” she said. “Even though they are separate issues, they highlight the challenges in rolling out the law.”