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Out-of-Pocket Spending Caps

The Affordable Care Act (ACA) places caps on how much money insured people will have to spend out of their own pockets for health care services that are covered in the new law’s essential benefits package. These caps on out-of-pocket health care spending will go into effect in 2014, when millions of Californians begin to purchase coverage in the California Health Benefit Exchange.

Initial Caps Based on HSA Limits

The ACA initially sets the level of these new caps by referencing an existing definition—the annual out-of-pocket spending limits for high-deductible health plans that are qualified for Health Savings Accounts (HSA). If these caps went into effect in 2012, they would be $6,050 for individuals and $12,100 for families. They will be slightly higher in 2014. The ACA will further reduce these out-of-pocket caps for families with incomes below 400 percent of the federal poverty level for a family of four) who purchase coverage in the Exchange.

Federal Poverty Guidelines 2011 - Data.png

Sliding Scale Based on Income

The caps will be reduced on a sliding scale as follows:

  • one-third of the HSA limit for families with incomes between 100 and 200 percent of federal poverty level,
  • one-half of the HSA limit for families with incomes between 200 and 300 percent of federal poverty level,
  • two-thirds of the HSA limit for families with incomes between 300 and 400 percent of federal poverty level.

1.9 Mil Californians will Save Over $3 Bil

It is estimated that in 2011 more than 1.9 million Californians are in families that will spend more out of pocket than these new caps. The total amount by which this out-of-pocket spending is estimated to exceed the caps is more than $3.0 billion. These new out-of-pocket caps will protect families from catastrophic medical costs when illness or accident strikes.

Most Californians Who Will Benefit are Working Families

Nearly three-quarters (71.5 percent) of the Californians who will spend more than the out-of-pocket caps are in working families. An estimated 1.4 million Californians who will spend more than the out-of-pocket caps are in families where at least one person is employed full- or part-time.

California Small Business Employees are Biggest Beneficiaries

An estimated 859,400 Californians are in families where the head of the household is employed by a small business will spend more than the out-of-pocket caps. More than two in five Californians who will spend more than the out-of-pocket caps are in families where the head of the household works for a business with fewer than 100 employees.

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