Out-of-pocket limits for 2021

Out-of-pocket maximums for non-grandfathered plans are indexed each year. The limits for 2021 will be: $8,550 for single coverage and $17,100 for other coverage tiers.

The IRS has not yet announced the different (and lower) limits that will apply to high-deductible health plans (HDHPs) paired with Health Savings Accounts (HSAs).

Rx coupons and other forms of direct support from manufacturers

HHS is finalizing the flexible approach proposed in February 2020 (discussed in our February 10, 2020 web post). As a result, it is now clear that plan sponsors (and health insurers) have complete flexibility in deciding whether and when the value of manufacturer coupons (or other forms of direct support) count toward the ACA-required OOP limit. The exception is when an applicable state law requires a different approach.

This announcement represents a major turnaround from the approach initially taken by HHS in early 2019. That approach generated confusion, leading HHS, along with the other federal departments implementing the ACA, to issue an answer to a frequently asked question (FAQ) in August 2019. In that FAQ, the departments announced an enforcement safe harbor under which plan sponsors were permitted to continue to decide when to count coupons toward the ACA-required OOP limit, pending issuance of further guidance from HHS. (We discussed that FAQ in our August 27, 2019 web post.)

The latest guidance is included in the final Notice of Benefit and Payment Parameters for 2021, which is scheduled to be published in the May 14, 2020 Federal Register.

The immediate implications

With the enforcement safe harbor announced last August still in effect, and the clear approach taken in the final notice released on May 7, 2020, plan sponsors can continue to count or exclude these coupons from the ACA’s OOP limit, whichever approach is provided for in the governing plan documents. HHS encourages plan sponsors to be transparent in plan materials about whether and when these coupons count toward the plan’s deductible and/or OOP limit. 

Questions remain about whether plan sponsors of HSA-qualified HDHPs may count these coupons and other forms of direct manufacturer support toward the HDHP’s deductible. HHS states in this notice that Treasury and the IRS are reviewing the comments HHS received on this issue to determine if additional guidance is needed. 

Under the federal anti-kickback statute, manufacturer coupons cannot be offered with respect to drugs paid for by any federal health care program, including Medicare, Medicaid or Part D. Some state programs may also not be eligible for coupon programs. Legal counsel should review the applicability of any program that is proposed for retirees or a governmental employer.

On all issues involving the interpretation or application of laws and regulations, plan sponsors should discuss the issues raised here with their legal, tax and other advisors before determining how the issues apply to their specific situations.