Lifetime & Annual Limits

The Affordable Care Act prohibits health plans from putting a lifetime dollar limit on most benefits you receive. The law also restricts and phases out the annual dollar limits a health plan can place on most of your benefits — and does away with these limits entirely in 2014.

What This Means for You

Before the health care law, many health plans set an annual limit — a dollar limit on their yearly spending for your covered benefits. Many plans also set a lifetime limit — a dollar limit on what they would spend for your covered benefits during the entire time you were enrolled in that plan. You were required to pay the cost of all care exceeding those limits.

• Under the law, lifetime limits on most benefits are prohibited in any health plan or insurance policy issued or renewed on or after September 23, 2010.
• The law restricts and phases out the annual dollar limits that all job-related plans, and individual health insurance plans issued after March 23, 2010, can put on most covered health benefits. Specifically, the law says that none of these plans can set an annual dollar limit lower than:
  • $750,000: for a plan year or policy year starting on or after September 23, 2010 but before September 23, 2011.
  • $1.25 million: for a plan year or policy year starting on or after September 23, 2011 but before September 23, 2012.
  • $2 million: for a plan year or policy year starting on or after September 23, 2012 but before January 1, 2014.

• No annual dollar limits are allowed on most covered benefits beginning January 1, 2014.

Some Important Details

• Be aware that plans can put an annual dollar limit and a lifetime dollar limit on spending for health care services that are not considered “essential.”
• If the new rules apply to your plan, they will affect you as soon as you begin a new plan year or policy year on or after September 23, 2010. (For example, if your policy has a calendar plan year, the new rules would apply to your coverage beginning January 1, 2011).
• If you have a “grandfathered” individual health insurance policy, your health plan is not required to follow the new rules on annual limits. (A grandfathered individual health insurance policy is a plan that you bought for yourself or your family; that you did not receive through your employer; and that was issued on or before March 23, 2010.) If you’re not sure whether your plan is grandfathered, ask your insurance company.
• The ban on lifetime dollar limits for most covered benefits applies to every health plan — whether you buy coverage for yourself or your family, or you receive coverage through your employer.
• Some plans may be eligible for a waiver from the rules concerning annual dollar limits, if complying with the limit would mean a significant decrease in your benefits coverage or a significant increase in your premiums.

For More Information

• Find detailed technical and regulatory information.
• HealthCare Blog: Changing What's in the Fine Print.
• Fact Sheet: Annual Limits Policy: Protecting Consumers, Maintaining Options, and Building the Bridge to 2014.
• Patient’s Bill of Rights: Learn about other consumer protections in the health care law.

Posted on: September 23, 2010

Last updated: January 24, 2012