Are cumulative embedded deductibles under family coverage subject to the out-of-pocket maximum?
A-20. Yes. An HDHP generally must limit the out-of-pocket expenses paid by the covered individuals, either by design or by its express terms.Example 1 . In 2004, a plan which otherwise qualifies as an HDHP provides family coverage with a $2,000 deductible for each family member. The plan pays 100 percent of covered benefits for each family member after that family member satisfies the $2,000 deductible. The plan contains no express limit on out-of-pocket expenses. Section 223©(2)(A)(ii)(II) limits the maximum out-of-pocket expenses to $10,000 for family coverage. The plan is an HDHP for any family with two to five covered individuals ($2,000 x 5 = $10,000). However, the plan is not an HDHP for a family with six or more covered individuals.Example 2 . The same facts as Example 1, except that the plan includes an umbrella deductible of $10,000.
Yes. An HDHP generally must limit the out-of-pocket expenses paid by the covered individuals, either by design or its express terms. (Notice 2004-50 Q-A:20) Question: If an employer changes health plans mid-year, does the new health plan fail to satisfy section 223(c)(2)(A) merely because it provides a credit towards the deductible for expenses incurred during the previous health plan’s short plan year and not reimbursed? Answer: No. If the period during which expenses are incurred for purposes of satisfying the deductible is 12 months or less and the plan satisfies the requirements for an HDHP, the new plan’s taking into account expenses incurred during the prior plan’s short plan year (whether or not the prior plan is an HDHP) and not reimbursed, does not violate the requirements of section 223(c)(2)(A).
Related Questions
- What is my maximum annual contribution to my HSA if our family coverage includes both individual (embedded) and family (umbrella) deductibles?
- How do the maximum annual HSA contribution limits apply to family HDHP coverage that may include an ineligible individual?
- Are cumulative embedded deductibles under family coverage subject to the out-of-pocket maximum?
