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Changes to Catastrophic Health Protection in 2015 Should Reassure Feds

An across-the-board cap on out-of-pocket expenses effective next year could bring some relief to FEHBP enrollees.

Federal employees and retirees will have some added health insurance protection in 2015 if disaster strikes.

Beginning next year, many enrollees in the Federal Employees Health Benefits Program won’t have to worry about paying separate (i.e., potentially more) out-of-pocket expenses for different benefits, like prescription drugs, the way some currently do. The out-of-pocket cap in 2015 for in-network care, known as catastrophic protection in FEHBP, cannot exceed $6,600 for a self-only plan in 2015, and $13,200 for a self and family plan.

That means those amounts are the most an enrollee would have to pay out-of-pocket in 2015 (within network) for deductibles, co-payments and co-insurance under the umbrella of catastrophic benefits coverage. The selected plan’s actual catastrophic protection benefit can be lower than the caps.

In 2014, however, plans were permitted to have separate out-of-pocket maximums at the cap mandated by the Affordable Care Act, for third-party administered benefits, like prescription drug benefits (though some of them chose to consolidate for 2014). Most FEHB plans have separate prescription drug managers. This year the highest caps were $6,350 for self-only and $12,700 for self and family coverage, but because of the allowance to charge separate out-of-pocket maximums, an enrollee could end up paying double those amounts -- $12,700 or $25,400, respectively.

So to reduce the risk of patients going broke because of major medical costs, things are changing going forward. In 2015, plans can divvy up the maximum ($6,600 for self, and $13,200 for self and family) among different benefit categories, as long as medical and mental health and substance abuse benefits are kept in the same out-of-pocket maximum category and all of the out-of-pocket maximums do not exceed those amounts. This is all assuming the enrollee remains in-network for their health care. The Affordable Care Act required all non-grandfathered group health plans to offer across-the-board catastrophic benefits in 2014, but gave health plans a year grace period to integrate a single maximum out-of-pocket amount for enrollees among different benefit categories.

This is a big deal, says David Ermer, a managing partner at Washington-based Ermer Law Group who represents the Association of Federal Health Organizations, a trade group of FEHBP plans. Insurance “should be for the big stuff, in my view, not for the little stuff, and this does provide really solid insurance protection, as long as you stay in-network, which, with most plans, is not that hard to do,” Ermer said.

Most plans, at least in 2014, were probably not charging self-only enrollees, for example, a total out-of-pocket maximum of $6,350 for major medical benefits and another $6,350 for pharmacy benefits; they were probably charging a lower combined amount, said Ermer. In 2015, though, the across-the-board cap “really caused them to crunch down,” he said, on their maximum out-of-pocket expenses.

Enrollees should look carefully at the catastrophic protection benefit offered under different health insurance plans to see providers’ maximum out-of-pocket costs for 2015, and their areas of coverage under it. For instance, the maximum out-of-pocket costs (and the ACA-mandated caps) do not apply to any penalties an enrollee might incur, and as with most things, there are other exceptions.  You can find that information in Section 4 of the plan’s brochure. 

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