For plan years beginning on or after September 23, 2010, plans may not impose any lifetime limits on the dollar value of essential health benefits. Individuals who had exhausted their lifetime limits must be allowed to re-enter the plan. Regulations impose notice and special-enrollment rules for such individuals.
Note: The prohibition on lifetime limits only applies to certain types of health plans, such as major medical insurance. It does not apply to HIPAA excepted benefits, such as disability, cancer, hospital indemnity, or accident insurance. Click here for more information about the types of benefits that are exempt from the Health Care Reform plan design mandates.
Lifetime Limit Hot Topics & FAQs
- What are essential health benefits?
Answer: Future regulations are expected to define “essential health benefits”. In the interim, federal guidance provides that plan sponsors may use a good faith judgment to determine what constitutes an essential health benefit. Click here to learn more about essential health benefits.
- May plans impose lifetime limits on some benefits?
Answer: It depends. Plans may impose lifetime limits on non-essential benefits. In addition, plans may impose non-dollar limits (such as service or visit limits) on any benefits. For example, an employer-plan sponsor may decide to only cover one organ transplant during a participant’s lifetime.
- Under the special enrollment rules, must the plan allow other family members to enroll or only the individual who had previously reached the plan’s lifetime limit?
Answer: The plan must provide all eligible family members an opportunity to enroll in the plan for the first plan year beginning on or after September 23, 2010, not just the individual who had previously reached the plan’s lifetime limit.
Summary of the lifetime limits notice requirements
Model lifetime limits notice
Summary of the special enrollment rules for individuals who had reached the plan’s lifetime limit
Summary of rules restricting annual plan limits
American Fidelity Assurance Company does not provide tax or legal advice.