Health Care Reform Website

Limits on Out-of-Pocket Maximums

The Affordable Care Act (ACA) sets annual limits on a plan participant’s out-of-pocket costs for in-network services for essential health benefits. These out-of-pocket costs include deductibles, co-insurance and co-payments but not premiums, balance billing amounts for out-of-network services or costs for services not covered under the plan.

All non-grandfathered group health plans must comply with the out-of-pocket limits for plan years beginning on or after January 1, 2014. The limits for 2019 are $7,900 for self-only coverage and $15,800 for family coverage.

The combined out-of-pocket costs for in-network services for essential health benefits provided through a single carrier or vendor must not exceed the annual maximum. Plans with carve-outs, such as those with a separate pharmacy benefit manager or managed behavioral health organization, must combine the out-of-pocket costs to ensure the total does not exceed the annual maximum.

The Departments of Labor, Health and Human Services and the Treasury (collectively, the “Departments”) recognized the administrative challenges that plans with carve-out vendors could face in combining out-of-pocket costs across vendors. In response, they issued transitional relief for the 2014 plan year and provided additional guidance on planning for future plan years.Information on the transition relief and guidance is available in our March 2014 Briefing linked below.

The Departments also issued guidance confirming that the self-only maximum annual limitation on out-of-pocket costs applies to each individual regardless of whether the individual is enrolled in self-only or family coverage. In other words, the individual limit is “embedded” in the family limit. This requirement applies to all non-grandfathered plans, including self-insured plans and large group health plans. Additional information on this change that is effective for plan years beginning on or after January 1, 2016 can be found in our June 2015 Briefing linked below.

California’s AB 1305

On October 8, 2015, AB 1305 was signed into law with an effective date of January 1, 2016.It applies only to insured plans within California. Similar to prior federal guidance issued by the Departments, AB 1305 imposes a maximum annual limitation on out-of-pocket costs that applies to each individual regardless of whether the individual is enrolled in self-only or family coverage. However, there is a key difference from the federal guidance.

Under the federal guidance, the ACA annual out-of-pocket maximum applies to all individuals enrolled in the family coverage. Under AB 1305, the annual out-of-pocket maximum depends on the amount set for the specific insured plan.For example, if the insured plan’s out-of-pocket maximum for self-only coverage is $2,500 and $5,000 for family coverage, then an individual enrolled in family coverage cannot be required to pay more than $2,500 in out-of-pocket costs.

AB 1305 also prohibits insured plans from imposing on an individual enrolled in family coverage a deductible that is greater than the deductible for self-only coverage. For example, a plan with a $1,000 deductible for self-only coverage and $2,000 for family coverage cannot impose more than a $1,000 deductible on any individual enrolled in family coverage. However, HSA-compatible High Deductible Health Plans (HDHPs) with both individual and family deductibles need to set the individual deductible so that it is not less than the minimum annual deductible for family coverage in order to maintain the group health plan’s status as an HDHP.

Additional Information

New Standards for Out-of-Pocket Maximums
     This Briefing describes recent “clarifying” guidance regarding the cost sharing rules for large group health plans relative to out-of-pocket maximums, including the application to High Deductible Health Plans.


Limitations on Out-of-Pocket Maximums
     This Briefing describes the 2014 transition relief available to group health plans with carve-out vendors and outlines steps to take for complying with the out-of-pocket maximums in 2015.


2016 Benefit Limits for Health & Welfare Plans
     Every year the United States Government sets new limits for various benefit programs to reflect inflation and changes in the law. This Briefing outlines the limits for 2016.


Essential Health Benefits


Deductible Limits