Agencies Issue Guidance on Impact of Drug Manufacturer Coupons on ACA's Out-Of-Pocket Limits

DOL, IRS and HHS (collectively, the "Agencies") have issued a FAQ to address whether drug manufacturers' coupons for name brand prescription drugs should be counted toward the annual cost-sharing limits under the Affordable Care Act ("ACA"), including situations where there is no medically appropriate generic drug available.

Background. The ACA imposes annual cost-sharing limits on the out-of-pocket costs that nongrandfathered group health plans may charge to participants for essential health benefits. HHS annually updates these cost-sharing limits in its annual Notice of Benefit and Payment Parameters ("NBPP"). For plan years beginning in 2020, the annual out-of-pocket maximum is $8,150 for self-only coverage, and $16,300 for other than self-only coverage.

In its 2020 NBPP, HHS addressed whether the value of coupons received from drug manufacturers may be counted toward the ACA's annual limits on cost-sharing. Specifically, HHS's 2020 NBPP provides that, effective for plan years beginning in 2020, non-grandfathered group health plans and issuers are permitted to exclude the value of drug manufacturers' coupons (for brand name drugs) from counting toward the ACA's annual limits on cost-sharing when a medically appropriate generic drug is available.

HHS's 2020 NBPP, however, did not discuss the application of coupons for brand-name drugs when a generic equivalent is not available. As a result, the Agencies received many questions from group health plans and issuers regarding the rule's scope, including whether drug manufacturer coupons should be counted toward the ACA's cost-sharing limits in situations where a medically appropriate generic drug is not available.

Agencies' FAQ. The FAQ acknowledges the ambiguity created by HHS's 2020 NBPP on this issue, and explains that the Agencies will provide clarification on this issue in its 2021 NBPP. The FAQ further explains that until that time, the Agencies will not take enforcement action against plans and issuers that exclude the value of drug manufacturing coupons from the ACA's annual limits on cost-sharing, even in situations where there is no medically appropriate generic equivalent available.

The FAQ is available by clicking here.