‘Doc Fix’ Law Includes Provision Removing Deductible Caps for Small Group Plans

Health Insurance Report™ helps you track and analyze legal, legislative, and regulatory developments affecting the health-insurance industry throughout implementation of the Affordable Care Act...

By Sara Hansard  

April 15 --The Protecting Access to Medicare Act of 2014, which was signed into law April 1 by President Barack Obama, repealed the Affordable Care Act's limitation on deductibles for small group employer-sponsored health plans.

The provision was included in Pub. L. No. 113-93, the “doc fix” law that delayed for a year a 24 percent reduction for Medicare payments to physicians as well as implementation of the International Classification of Diseases, 10th Revision, medical claims coding system. Section 213 repealed annual caps on small group health plan deductibles that were included in the ACA. The provision was originally introduced as a bill (H.R. 2995) by Rep. Tom Reed (R-N.Y.) in August 2013.

Previously, Section 1302(c) of the ACA limited deductibles in employer-sponsored health plans covering the equivalent of 50 or fewer full-time employees to $2,000 for single coverage and $4,000 for family coverage for 2014, according to an April 10 analysis issued by law firm Proskauer Rose LLP.

The implementing regulations prohibited insurance carriers from taking into account an employer's health flexible spending account or health reimbursement account contributions in determining compliance with the deductible limits, according to the analysis by Proskauer associate Stacy Barrow.

“This left some small employers with no choice but to purchase plans with lower deductibles if they were to continue offering coverage, which in most cases significantly increased premiums,” Proskauer said. Carriers in some states, however, were able to avoid implementing the deductible limit rules “due to various 'fixes' offered by the Obama administration through the Centers for Medicare and Medicaid Services, as well as an exception in the Health and Human Services regulations, which enabled plans to exceed the deductible limits if it was necessary in order for the plan to achieve a specified actuarial value,” the analysis said.

Repeal Retroactive to ACA Enactment

The repeal of the deductible provision is retroactive to the date of the ACA's enactment, March 23, 2010. “It is unclear how quickly, if at all, carriers offering plans in the small group market will return to offering policies with deductibles that exceed the now-repealed $2,000/$4,000 limits,” Proskauer said.

A release issued April 6 by House Speaker John Boehner (R-Ohio) said, “Repealing this provision will give employers more flexibility over the type of health care options they can offer their employees, and will expand the use of high-deductible plans paired with Health Savings Accounts (HSAs). This will help families keep their private insurance through their employer, rather than be forced to go on an ObamaCare exchange with fewer options and higher costs.”

In other action, on April 9 the House rejected legislation (H.R. 4414) that would have exempted expatriate health plans from the Affordable Care Act's coverage requirements. The bill, introduced April 7 by Rep. John Carney (D-Del.), was voted on a motion to suspend House rules, which required a two-thirds vote. The vote on the legislation was 257-159.

On April 9, Democratic House members Henry Waxman (Calif.), Sander Levin (Mich.), George Miller (Calif.) and Xavier Becerra (Calif.) issued a letter urging members to vote against the bill, the Expatriate Health Coverage Clarification Act.

“While there may be a need to narrowly clarify the law with respect to so-called 'expatriate' coverage, this legislation creates large loopholes that would permit insurance companies to avoid their responsibilities under the law and sell inferior insurance policies to American and foreign workers and their families who live in the United States,” the letter said.


To contact the reporter on this story: Sara Hansard in Washington at shansard@bna.com

To contact the editor responsible for this story: Janey Cohen at jcohen@bna.com