Plans may impose any annual dollar limits on essential health benefits no lower than:
- $750,000 for plan years beginning on or after September 23, 2010;
- $1.25 million for plan years beginning on or after September 23, 2011; and
- $2 million for plan years beginning on or after September 23, 2012.
Annual limits are prohibited for plan years beginning on or after January 1, 2014.
Note: The restrictions on annual limits only apply to certain types of health plans, such as major medical insurance. They do 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.
Annual Limits Hot Topics & FAQs
- Annual Limit Waivers
Under Health Care Reform, plans could have restricted annual dollar limits on essential health benefits for plan years before 2014, after which such limits are prohibited. HHS waived this requirement for certain plans that could show that these limits would result in a significant decrease in access to benefits or a significant increase in premiums. The waivers expire on the first day of the plan year in 2014. The FAQs reaffirms that the waivers are only valid through the plan or policy year in effect when the plan applied for the waiver. As such, a change in the plan year will not extend the waiver.
- May plans still impose service-based limits?
Answer: Generally yes. For example, a plan may limit physical therapy coverage to a certain number of treatment sessions per illness or injury. However, a plan that limits coverage to a certain number of events (such as treatment sessions) and to a certain dollar limit per event (such as $100 per treatment session) probably would be considered to include an annual limit.
- 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.
American Fidelity Assurance Company does not provide tax or legal advice.