2022 Proposed OOP Limits and ALE Penalties

Proposed Benefit & Payment Parameters for 2022

The Affordable Care Act requires annual updates for numerous requirements for insurers and public health insurance Exchange Marketplaces.  These always include an update for employers as well.  The 2022 proposal (announced here and summarized in this fact sheet) includes indexing of approximately 6.4% for employers as follows:

• The out-of-pocket limits for non-grandfathered plans are proposed to increase
  • From the 2021 values of $8,550 per person and $17,100 per family
  • To potential 2022 limits of $9,100 per person and $18,200 per family
• The penalties for applicable large employers (ALEs) are proposed to increase
  • From the 2021 values of $2,700 under §4980H(a) and $4,060 under §4980H(b)
  • To potential 2022 limits of $2,880 under §4980H(a) and $4,320 under §4980H(b)

Regulators are providing 30 days for public comments.  IMA will let you know the official values for 2022 once finalized in January.

One additional proposal is to require all insurers in the individual health insurance market to treat the complete cessation of employer contributions to COBRA as triggering a special enrollment period (SEP).

• Currently the federal health insurance Exchange Marketplace treats complete cessation of employer contributions to COBRA as an SEP for the 60 days before and 60 days after the date employer contributions will cease.
• This proposal “would ensure that individual market policies sold off-Exchange and through State Exchanges align with it.”
• This ensures individuals have 60 days before the complete cessation of employer contributions to elect individual coverage to begin the day after the COBRA subsidy ends.
• It also ensures individuals have up to 60 days after the COBRA subsidy ends to still enroll in coverage to begin the first of the month after they apply.

In addition to complete cessation of employer contributions to COBRA being an SEP, they are also proposing to treat reductions in employer contributions to COBRA as an SEP.  Regulators are seeking public comment on this and on whether they “should also adopt a threshold for the level of reduction of employer contributions for COBRA continuation coverage that should trigger a special enrollment period.”

They are also proposing if an individual “did not receive timely notice of a triggering event or was otherwise reasonably unaware that a triggering event occurred,” that individual can be granted an SEP from “the date that he or she knew, or reasonably should have known” of the event and “will also allow [them] to choose the earliest effective date that would have been available if he or she had received timely notice of the triggering event.”  This proposal may help people secure individual market coverage without a gap in coverage in the event communications were delayed to someone.

Employers may also be interested to know that regulators “will continue to refrain from taking enforcement action against Exchanges that do not perform” verification of employer offers of coverage before granting someone a tax credit in the Exchange, and “will extend this non-enforcement posture from plan year 2021 through plan year 2022.”  We point this comment out because we know it has been frustrating for employers to not be given notice from the Exchange when an employee applies for a tax credit that might trigger a penalty (either to the employee on their personal tax return for securing a tax credit they don’t qualify for and must repay, or to the employer for not offering affordable minimum value coverage).

This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.