New plan eliminates annual and lifetime limits

The stories are heartbreaking, but unfortunately for many Americans they are true.

A 6-year-old child diagnosed with a progressive liver disease undergoes a lifesaving liver transplant only to find that her father’s health plan under which she is insured limits coverage for transplants to $250,000 – not enough to pay for her transplant. Her family now struggles to pay the $60,000 balance still owed to the hospital.

For patients and families dealing with costly chronic conditions, having a health plan with annual or lifetime benefit limits can be a frightening proposition. But thankfully, the Patient Protection and Affordable Care Act of 2010, or ACA for short, addresses this problem and protects you and your family against unexpected and high out-of-pocket medical expenses.

Under ACA, insurance companies will no longer be allowed to set limits on the dollar amount of health benefits they will cover in a year or over the course of a member’s lifetime. That means you won’t run out of coverage if you develop a health problem that is costly to treat.

Elimination of lifetime limits

Effective on or after Sept. 23, 2010, (depending on when your plan year began) insurers were no longer allowed to stop paying for your care because you had reached a lifetime benefit limit. You’re protected under this provision if you have coverage through your workplace or if you have purchased a policy directly from an insurance company.

Gradual elimination of annual benefit limits

By 2014 insurers will not be allowed to limit payment of claims to an annual maximum dollar amount with respect to “essential benefits”’ leaving in the enrollee responsible for all remaining costs. Essential benefits are defined in the regulations and include services such as emergency care, hospitalization, physician visits and prescription drugs. Before the complete elimination of annual benefit limits in 2014, the ACA has established a “floor” or minimum dollar amount at which the annual limits must be set in order to comply.

For example, for plan years that began on or after at which Sept. 23, 2010, but before Sept. 23, 2011, the annual benefit limit floor must be no less than $750,000 per enrollee for essential benefits.

The annual limits described above apply on an individual basis. For family coverage, you could have a child reach the annual limit, but the essential medical care that other family members require will still be covered by their health plan.

Source: UAW Research and Social Security Department

For more information on what health care reform means for you and your family, please visit the consumer website maintained by the Department of Health and Human Services at healthcare.gov.