Client Advisory

Maximum Out-of-Pocket (MOOP) and HSA Limits Increase for 2020

The Department of Health and Human Services (HHS) has published the Notice of Benefit and Payment Parameters for 2020 which, for plan years beginning after December 31, 2019:

  • Increases the maximum out-of-pocket (MOOP) limits for Essential Health Benefits (EHB) and
  • Addresses the treatment of drug manufacturer coupons for brand name drugs.

The chart below also shows Health Savings Account inflation-adjusted parameters as announced by the Internal Revenue Service (IRS) for 2020 in Revenue Procedure 2019-25.

Maximum Out-of-Pocket Limits and HSA Parameters

Parameter

2020

2019

In-Network MOOP on EHBs for non-grandfathered health plans

Self Only1
$8,150

Self Only
$7,900

Family1,2
$16,300

Family2
$15,800

Maximum Contributions to an HSA Account (whether by employer or employee)

Self Only
$3,550

Self Only
$3,500

Family
$7,100

Family
$7,000

Minimum Deductible that an HSA-Qualified  High Deductible Health Plan (HDHP) can have

Self Only
$1,400

Self Only
$1,350

Family
$2,800

Family
$2,700

Maximum In-Network Out-Of-Pocket for an HDHP paired with an HSA

Self Only
$6,900

Self Only
$6,750

Family
$13,800

Family
$13,500

Cost Sharing Change for Prescription Drugs

For plan years beginning on or after January 1, 2020, the regulation continues to allow plans to not count amounts paid toward cost sharing using any form of direct support (such as coupons offered by drug manufacturers to enrollees to reduce or eliminate immediate out-of-pocket costs) for specific prescription brand drugs that have an FDA generic equivalent available toward the MOOP unless it is determined (generally during the appeals process) that the generic drug was not medically appropriate. However, as explained in the preamble, the HHS intends that in circumstances where a generic equivalent is not available (or is not medically appropriate) the direct support offered by drug manufacturers must be counted toward the MOOP. The chart below summarizes the change.

 

Is it required to count toward MOOP?

 

Before 1/1/2020

On or after 1/1/2020

Coupons for Drugs with FDA generic equivalent available

No

No, unless generic is not medically appropriate

Penalties for selecting brand drug with FDA generic equivalent available

No

No

Coupons for Drugs without FDA generic equivalent available

No

Yes

CHEIRON OBSERVATIONS

For the majority of plans that do not track coupon use, this guidance has no impact because coupons are implicitly credited toward the MOOP. However, some plans have implemented efforts to track coupon use, often combined with an increase in copays on coupon-eligible drugs, and in such cases do not count the coupon toward the MOOP. The guidance confirms that plans do not need to recognize coupons for brand drugs with a generic equivalent and is consistent with other guidance on other generic incentives (such as penalties for selecting a brand drug with an FDA generic equivalent). However, the guidance regarding coupons on drugs without a generic equivalent appear to require that the coupons be counted toward the patient MOOP, which could potentially increase plan cost. Plans with such coupon programs should contact their consultant and/or attorney to discuss the impact of this guidance and possible remedies.

If you have any questions about these or other limits or about the impact on your plan, contact your Cheiron consultant.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Accordingly, we do not provide legal services or tax advice.


1 The proposed rule released in January set the Out-of-Pocket (OOP) limit at $8,200 for self-only and $16,400 for family, but the final rule lowered them to $8,150 and $16,300, respectively.

2 Note plans with family OOP limits must apply the self-only limit for each person enrolled in family coverage. This means that once a person covered under a family plan reaches the self-only MOOP limit, then all expenses above the self-only limit for covered EHBs for that person must be reimbursed at 100%, even if the family MOOP limit has not been met.