Growth of ACA Maximum Out-of-Pocket Limits Exceeds Wage Increases

The maximum out-of-pocket limit in Affordable Care Act (ACA) marketplace plans is rising faster than enrollee wages and salaries, a Peterson-KFF Health System Tracker found.

Researchers used data from the Congressional Budget Office (CBO) and CMS National Health Expenditure Accounts to analyze current and future out-of-pocket maximums for ACA marketplace plans and health savings account (HSA)-qualified plans.

Due to federal regulations, most privately insured individuals have a health plan with an out-of-pocket limit. The Medicare Modernization Act of 2003 established a federal out-of-pocket maximum for HSA-qualified plans, while the Affordable Care Act of 2010 required non-grandfathered private health plans to set out-of-pocket limits starting in 2014.

The maximum out-of-pocket limit for a single-coverage HSA-qualified health plan is $7,050 in 2022. For non-grandfathered private health plans on the ACA marketplace, the maximum out-of-pocket limit for in-network covered services is $8,700 in 2022.

When the ACA maximum out-of-pocket limit took effect in 2014, the limits were the same as HSA-qualified plans: $6,350 for single coverage and $12,700 for family coverage.

However, the out-of-pocket limit for HSA-qualified plans is indexed to the overall chained-consumer price index for all urban consumers (chained-CPI-U), while the ACA limit is inflated by the growth of employer-sponsored health insurance premiums. This has led to a growing gap in the maximum out-of-pocket limits for the plan types.

Out-of-pocket limits for both plan types are expected to grow in the upcoming years but at different rates.

Researchers found that the growth in ACA maximum out-of-pocket limits is faster than that of enrollee wages.

In 2023, the ACA out-of-pocket limit is expected to be $9,100, compared to $6,350 in 2014. This represents a 43 percent increase. Wages and salaries are expected to increase by 31 percent over the same period.

Out-of-pocket limits for HSA-qualified plans are also expected to increase but will have only risen 18 percent between 2014 and 2023, seeing a 2023 limit of $7,500, researchers projected.

CBO expects wages to grow by 83 percent between 2014 and 2033. Peterson-KFF researchers projected that ACA maximum out-of-pocket limits will grow by 122 percent and HSA-qualified plan limits will increase by 46 percent over the same period.

The growth difference between ACA plan limits and HSA-qualified plan limits stems from the projected differences between the growth of chained-CPI-U and employer-sponsored health plan spending.

For example, the chained-CPI-U is expected to increase by 2 percent each year over the next ten years, according to CBO. Using this projection, the maximum out-of-pocket limit for single-coverage HSA-qualified plans will rise to $8,750 by 2030.

Meanwhile, CMS projected that employer-sponsored health insurance spending would increase by 4 percent each year for the next decade. This means that the ACA maximum out-of-pocket limit for non-grandfathered private health plans for single coverage will reach $12,500 in 2030.

“Our finding that the ACA’s maximum out-of-pocket limit is rising faster than wages has implications for affordability of healthcare, particularly for those with higher levels of health spending,” researchers wrote.

“An out-of-pocket limit is a significant financial protection for enrollees who face high cost-sharing and have high healthcare needs by limiting how much enrollees must pay in coinsurance, copayments, and deductibles. However, as out-of-pocket limits grow, and particularly as they outpace wages and salaries, they offer less protection.”

A possible policy option would be to reduce the ACA maximum out-of-pocket limit or change how it is indexed to reduce it over time. However, lower out-of-pocket limits would cause insurers to adjust cost-sharing to meet actuarial value standards, the report noted.

This would result in sicker people who meet their out-of-pocket limit saving money and healthier people who do not hit their limit paying more.

Lowering maximum out-of-pocket limits for HSA-qualified plans would also cause plan premiums to rise faster than for non-grandfathered private health plans.