This Tip reports on the interim final regulations issued under the Patient Protection and Affordable Care Act (the "Health Care Act") regarding the prohibition on annual and lifetime dollar limits on "essential health benefits" under group health plans. (Regulations have not yet been issued defining "essential health benefits" for purposes of the prohibition on annual and lifetime limits.)
Beginning with the first plan year starting on or after September 23, 2010, the Health Care Act prohibits group health plans and individual health insurance coverage from imposing annual or lifetime limits on the dollar value of essential health benefits, except that restricted annual limits are allowed prior to January 1, 2014.The prohibition on annual dollar limits goes into full effect on January 1, 2014, when no annual dollar limits on essential benefits will be permitted. From the first plan year beginning after September 23, 2010 until January 1, 2014, group health plans may only impose restricted annual dollar limits on essential health benefits, which limits apply on an individual-by-individual basis.
Annual limits on the dollar value of essential health benefits may not be less than the following amounts:
For plan years beginning on or after September 23, 2010 but before September 23, 2011, $750,000;
For plan years beginning on or after September 23, 2011 but before September 23, 2012, $1.25 million; and
For plan years beginning on or after September 23, 2012 but before January 1, 2014, $2 million.
The restriction on annual limits does not apply to flexible spending accounts, health savings accounts, Archer Medical Savings Accounts, or to Health Reimbursement Arrangements that are integrated with other coverage as part of a group health plan when the other coverage complies with the restriction on annual dollar limits.
Dental-only and vision-only plans that are provided under separate insurance contracts are exempt from the Health Care Act, and are therefore not subject to the restriction on annual dollar limits.
The regulations provide for the Secretary of Health and Human Services to establish a program under which waivers may be sought of the restrictions on annual dollar limits for limited benefit, or so-called "mini-med" plans, if compliance with the rules would result in a significant decrease in access to benefits or a significant increase in premiums.
The Health Care Act does not prevent a plan from excluding all benefits for a condition (although other laws, such as the Americans with Disabilities Act, may), 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.
Until regulations are issued defining "essential health benefits," group health plans and insurance issuers are cautioned to make good faith efforts to comply with a reasonable interpretation of the term "essential health benefits" and to apply the term in a consistent manner.