Out-of-Pocket Maximum for Pharmacy Benefits

Jamie Scott

Health Care Reform places caps on out-of-pocket maximums on all non-grandfathered plans beginning in 2014. For 2014, the maximums are $6,350 for individual coverage and $12,700 for other coverage classes. Even though for most plans the out-of-pocket maximum has included deductibles and co-insurance payments, the maximum out-of pocket limit under Health Care Reform must also include co-payments, including co-pays for prescription drugs. Finally, the maximum out-of-pocket is intended as a combined limit that applies to all benefits under the plan, including major medical and pharmacy benefits.

Guidance issued last February recognized that implementing a combined limit where the pharmacy benefits administrator is not the same as the major medical benefits administrator will require additional time. The guidance allowed for a continuation of separate out-of-of pocket maximums until 2015 as long as the major medical plan complied on its own in 2014, and if the pharmacy benefit applied an out-of-pocket maximum before 2014, the pharmacy maximum for 2014 would not exceed the new limit.

The guidance was unclear on what out-of-pocket maximum would apply to pharmacy benefits in 2014 if the pharmacy benefits did not previously have a limit, which is the typical structure. Some commentators suggested that for 2014, the pharmacy benefit would be required to implement the same limit that applied to major medical expenses, while others speculated that maybe the pharmacy benefit could continue without any maximum out of pocket.

An unnamed federal official has now indicated in a recent New York Times article that for 2014, a pharmacy benefit administrator that had no out-of-pocket maximum in 2013 will not be required to implement any maximum in 2014. While this is good news for plan sponsors and insurance carriers, advocates for people with chronic illnesses have expressed deep disappointment with this decision.