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The Department of Health and Human Services released its final Notice of Benefit and Payment Parameters for 2020. This final rule describes benefit and payment parameters under the Affordable Care Act (ACA) that apply for the 2020 benefit year.
Annual Cost Sharing Limitation
The ACA’s out-of-pocket maximum (cost sharing) limit will increase to $8,150 (self-only coverage) and $16,300 (family coverage) for 2020. This maximum is updated annually based on the percent increase in average premiums per person for health insurance coverage.
Individual Mandate’s Affordability Exemption
Under the ACA, individuals who lack access to affordable minimum essential coverage (MEC) are exempt from the individual mandate penalty. Coverage is considered affordable for an employee if the required contribution for the lowest-cost, self-only coverage does not exceed 8% of household income (adjusted annually).
For 2020, an individual qualifies for this affordability exemption if he or she must pay more than 8.24% of his or her household income for MEC.
The tax reform bill, called the Tax Cuts and Jobs Act, reduced the ACA’s individual mandate penalty to zero, effective beginning in 2019. As a result, beginning in 2019, individuals will no longer be penalized for failing to obtain acceptable health insurance coverage. However, the final rule notes that individuals may still need to seek this exemption for 2019 and future years (for example, in order to be eligible for catastrophic coverage).
Direct Enrollment in Exchanges
The final rule enhances direct enrollment through the Exchanges in an effort to provide greater flexibility in how consumers shop for health coverage. The rule expands opportunities for individuals to directly enroll in Exchange coverage by enrolling through the websites of certain approved third party partners instead of through HealthCare.gov.
Special Enrollment Periods
Under the Exchanges, if someone loses their health insurance during the year or experiences a qualifying event, certain special enrollment periods are available. The final rule establishes a new special enrollment period, available at the option of the Exchange, for off-Exchange enrollees who experience a decrease in household income and are determined to be eligible for the premium tax credit through the Exchange.