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Health care reform: No annual or lifetime benefit caps

Before the Affordable Care Act was signed into law, health insurance companies were allowed to set an annual limit on the dollar amount they would spend each year for your covered benefits. They could also place a lifetime cap on how much they would pay under your plan.

If the cost of your medical care goes beyond those limits, and you pay out of pocket. But no more.

Lifetime limits are now banned under health care reform regulations and annual limits are being phased out until their entire elimination in 2014. There are, however, some exceptions to consider.

For one, insurers can still place annual and lifetime limits on coverage they consider "nonessential." While that is not defined in the new regulations, "essential" services include ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, prescription drugs; rehabilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.

If the new rules apply to your plan, they take affect you as soon as you begin a new plan year or policy year, on or after Sept. 23, 2010. So, for example, if your health plan follows a calendar plan year, they would affect you starting Jan. 1, 2011.

If you a plan that is being "grandfathered" in, it does not have to comply. Grandfathered health plans are those purchased before March 23, 2010 (that’s when the Patient Protection and Affordable Care Act was signed into law). They lose their “grandfathered” status if certain benefits within them change.

Plans cannot set an annual dollar limit lower than:

  • $750,000 for a "plan year" or "policy year" starting on or after Sept. 23, 2010, but before Sept. 23, 2011.
  • $1.25 million for a plan year or policy year starting on or after Sept. 23, 2011, but before Sept. 23, 2012.
  • $2 million for a plan year or policy year starting on or after Sept. 2012, but before Jan. 1, 2014.

 If you’ve reached a previous lifetime limit

Also, if you previously reached a lifetime limit with your health insurance coverage, the lifetime limit no longer applies.

Back to the health care reform timeline

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