Skip to main content

Health plan deductibles and OOPMs: Key concepts for employers

health plan deductibles

Deductibles and out-of-pocket maximums (OOPMs) are important cost-sharing parameters for health plans. This compliance overview summarizes key rules for employers regarding these limits, including the special limits for high-deductible health plans (HDHPs) and the Affordable Care Act’s (ACA) OOPM on essential health benefits. 

[Download the full PDF report] 

Understanding deductibles and OOPMs 

Deductibles and OOPMs play a central role in how health plan costs are shared between the plan and the enrollee. Here’s  important terms employers need to know: 

  • Deductible: The amount a member must pay out-of-pocket for covered services before the health plan begins to contribute. 

  • Out-of-Pocket Maximum (OOPM): The annual cap on what a member pays for covered services. Once reached, the health plan covers 100% of additional covered costs for the rest of the year. 

  • Premium trade-off: Plans with higher deductibles and OOPMs often come with lower monthly premiums, and vice versa. 

While employers have flexibility in plan design, certain federal requirements apply: 

  • HDHP rules: HDHPs paired with Health Savings Accounts (HSAs) must meet IRS-established minimum deductibles and maximum OOPMs. 

  • ACA compliance: All health plans must adhere to the ACA’s OOPM limits for essential health benefits (EHBs). 

  • Annual adjustments: These limits are updated annually for inflation, so employers should review their plan designs before each new plan year to ensure compliance. 

Questions? 

Contact TruePlan! Our team of advisors can help you with questions within the scope of employee benefits.   

This content is for informational purposes only. It has been partially generated from an AI language model, which may not always be exhaustive or tailored to individual circumstances. We encourage you to contact one of our experts for more information. We assume no liability arising from any use of this content. 

Popular posts from this blog

What is HR vendor management? Overview with scenarios

Vendor management can be a litigious environment where efficiency, transparency and risk mitigation are paramount. With the right advisor in your organization’s corner, you’ll feel more confident navigating vendors and managing their services, ensuring streamlined processes and strategic alignment.   In this blog post, we'll cover the basics: What vendor management in HR entails, why it's important, how it can transform businesses and some scenarios in a few business types. Level up your knowledge and find the right partners to thrive.  Understanding vendor management in HR  Vendor management in HR involves the systematic management of third-party suppliers who provide goods and services essential to HR operations. This includes managing contracts, ensuring compliance with service level agreements and optimizing vendor performance to align with a company's long-term business goals.  A robust vendor management strategy can provide organizations with a structured ...
Read more

Section 125 – Cafeteria Plans Overview

A Section 125 plan, or cafeteria plan , allows employees to pay for certain benefits on a pre-tax basis. Employers use these plans to provide their employees with a choice between cash and certain qualified benefits without adverse tax consequences. Paying for benefits on a pre-tax basis reduces the employee’s taxable income and, therefore, reduces both the employee’s and the employer’s tax liability. To receive these tax advantages, a cafeteria plan must comply with the rules of Section 125 of the Internal Revenue Code and related IRS regulations. Under these rules, a Section 125 plan must have a written plan document and can only offer certain qualified benefits on a tax-favored basis. Once an employee makes a Section 125 plan election, they may not change that election until the next plan year, unless the employee experiences a permitted election change event. Also, for highly compensated employees to receive the tax advantages associated with a Section 125 plan, the plan must pass ...
Read more

FMLA Outsourcing: 6 Key Employer Insights

Organizations need help navigating employee leave of absence. With so many complex regulations, many employers consider outsourcing their employee leave programs to specialized third-party vendors. Compliance with the Family and Medical Leave Act, a federal law allowing eligible employees to take unpaid leave for personal reasons, is central to administering employee leave.  In this blog, we'll go more than six insights employers need about FMLA outsourcing. Use this as your go-to list as you weigh the potential benefits against the drawbacks.  1. Third-party prowess  Expertise is at the heart of the outsourcing question. Can your in-house human resource team competently manage the complexities of FMLA requirements? Or are there benefits to be gained from a third-party vendor’s specialized focus?  In-house HR staff might need help with FMLA regulations , causing compliance errors and/or knowledge gaps. In this case, it would make sense for employers to search fo...
Read more