Lifetime Limits

People with many medical needs fear reaching lifetime and annual limits that some insurers put on plans. For families that have high medical costs and reach the limits, the effects are often catastrophic to the family if they must pay out of pocket for their medical costs. They then face insurmountable medical debt and/or being unable to continue needed treatment. 

What are lifetime limits?

A lifetime limit is the total amount of money that a health insurance company will pay for your health care over the lifetime of your policy.  According to HHS, the average lifetime limit is $4.7 million.

How common are lifetime limits in current policies?

Currently, the majority of health insurance plans apply lifetime limits, which affects about 102 million people.  However, this varies by type of plan:

  • 63% of large employer plans
  • 52% of small employer plans
  • 89% of individual policies    

How will the law change lifetime limits?

The use of lifetime limits in health plans and insurance policies issued or renewed on or after September 23, 2010 will be prohibited. Plans cannot establish a dollar amount lifetime limit on the benefits for any individual.

Do the lifetime limit changes apply to all health insurance plans?

No. There is one exception. Individual health insurance plans in existence prior to March 23, 2010 plans are exempted. Individual health insurance plans are policies that individuals buy on the open insurance market (they do not include employer sponsored plans).

Do the lifetime limits changes apply to Flexible Spending Arrangements (FSA) or Medical Savings Accounts (MSA)

No. FSAs and MSAs are generally not considered group health insurance. These programs are not affected by this provision of the Affordable Care Act

What if I have already hit my lifetime limit?

If you are otherwise eligible for the health insurance, you must be notified that the lifetime limits no longer apply and you should be given an opportunity to enroll. You must be given written notice and have a minimum of 30 days to enroll.