Posted by: Dal Watson | July 12, 2010

Prohibition of Annual and Lifetime Limits under PPACA:

[Key Health Law Provisions Begin Sept. 23]

[Health plans may now apply for waivers from new annual limit rules]

The PPACA prohibits all group health plans and plans offering individual coverage from maintaining annual and lifetime limits on the dollar value of health benefits. The PPACA prohibits annual limits on the dollar value of benefits generally, but allows “restricted annual limits” with respect to “essential health benefits” (as defined in section 1302(b) of the Affordable Care Act) for plan years beginning before January 1, 2014. With respect to benefits that are not “essential health benefits”, a plan or issuer may impose annual or lifetime per-individual dollar limits on specific covered benefits. For plan years beginning before the issuance of regulations defining “essential health benefits”, for purposes of enforcement, plans are expected to make good faith efforts to comply with a reasonable interpretation of the term “essential health benefits”.

Final Interim Rule on Prohibition of Annual and Lifetime Limits:

These interim final regulations adopt a three-year phased approach for restricted annual limits. Under these interim final regulations, annual limits on the dollar value of benefits that are “essential health benefits” may not be less than the following amounts for plan years (in the individual market, “policy years”) beginning before January 1, 2014:

* For “plan or policy years” beginning on or after September 23, 2010 but before September 23, 2011, $750,000;

* For “plan or policy years” beginning on or after September 23, 2011 but before September 23, 2012, $1.25 million; and

* For “plan or policy years” beginning on or after September 23, 2012 but before January 1, 2014, $2 million

Plans or issuers may use higher annual limits or impose no limits.

The interim final regulations clarify that the prohibition under PHS Act section 2711 does not prevent a plan or issuer from excluding all benefits for a condition, but if any benefits are provided for a condition, then the requirements of the rule apply. Therefore, an exclusion of all benefits for a condition is not considered to be an annual or lifetime dollar limit.

The minimum annual limits for plan or policy years beginning before 2014 apply on an individual-by-individual basis.

Under these interim final regulations, individuals who reached a lifetime limit under a plan or health insurance coverage prior to the applicability date of these interim final regulations and are otherwise still eligible under the plan or health insurance coverage must be provided with a notice that the lifetime limit no longer applies.

These interim final regulations provide that the prohibition on limits does not apply to CDHPs.

This is a summary of the Patient Protection and Affordable Care Act. It is intended to provide accurate and authoritative information in regard to the subject matter covered. The accuracy of the information is not guaranteed as is provided with the understanding that we are not rendering legal, accounting, or tax advice.


Responses

  1. Dal, thanks for posting this. It is useful for people to know that the annual limits they may currently have on their health insurance policies will be raised, and by how much, over the next three years, if only for peace of mind.
    In this time of change in health insurance, the information on http://www.healthcompareguide.com may be of use to your readers.
    [I work with HealthCompare]


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