What Are the Restrictions on Annual & Lifetime Limits under PPACA?

January 4, 2010 (PLANSPONSOR.com) - We have received a number of questions on how to apply the new annual and lifetime limit restrictions.   
By PS

As we have discussed before, PPACA no longer allows certain annual or lifetime limits.   We answer recent questions we’ve received below.

Can a group health plan have any annual or lifetime limits after 1/1/11?

For the 2011 plan year, a group health plan may continue to have annual dollar limits on “non-essential” health benefits, but only restricted annual dollar limits on “essential” health benefits.  For essential health benefits, the new annual dollar limit must be at least $750,000.  The plan is not allowed to have a lifetime dollar limit on essential health benefits.  The new rule applies to plan years beginning on or after 9/23/10 (so 1/1/11 for calendar year plans).

Are all annual limits abolished for 2014?

PPACA phases out annual dollar limits on essential health benefits.  As noted above, a plan’s annual dollar limit on essential benefits for 2011 must be at least $750,000.  This amount increases to $1.25 million for the 2012 plan year and $2 million for the 2013 plan year.  Starting in 2014, a group health plan is not permitted to have any annual dollar limits on essential health benefits.

Is still permissible to have visit or treatment limits not expressed as dollar limits (for example, 30 visits per calendar year)?

The new PPACA requirement applies only to annual or lifetime dollar limits and does not extend to specific treatment limits, like day or “number of visit” limits.  So these types of limits still would be permitted.

How do we know if benefits are "essential" health benefits?

PPACA identifies the following categories of "essential" health benefits: 

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care.

Neither the PPPACA statute nor the regulations or guidance defines the above terms or explains what services should be included in these categories.  The agencies say they will issue further guidance, but until they do, that they will take into account "good faith efforts" to comply with a reasonable interpretation of the term essential health benefits.  So, plans likely will need to make judgment calls as to which services they offer should be considered essential and subject to the new rules.

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Got a health-care reform question?  You can ask YOUR health-care reform legislation question online at http://www.surveymonkey.com/s/second_opinions

You can find a handy list of Key Provisions of the Patient Protection and Affordable Care Act and their effective dates at http://www.groom.com/HCR-Chart.html  

Contributors:

Christy Tinnes is a Principal in the Health & Welfare Group of Groom Law Group in Washington, D.C.  She is involved in all aspects of health and welfare plans, including ERISA, HIPAA portability, HIPAA privacy, COBRA, and Medicare.  She represents employers designing health plans as well as insurers designing new products.  Most recently, she has been extensively involved in the insurance market reform and employer mandate provisions of the health-care reform legislation.

Brigen Winters is a Principal at Groom Law Group, Chartered, where he co-chairs the firm's Policy and Legislation group. He counsels plan sponsors, insurers, and other financial institutions regarding health and welfare, executive compensation, and tax-qualified arrangements, and advises clients on legislative and regulatory matters, with a particular focus on the recently enacted health-reform legislation.  

PLEASE NOTE:  This feature is intended to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

 

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