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What does “lifetime maximum” mean in health insurance?

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Keep in mind...
  • A ”lifetime maximum” is the total amount that your insurance company will agree to pay out for medical services over the course of your lifetime
  • The Affordable Care Act limited lifetime bans for certain essential health benefits
  • There may still be lifetime maximums on dental and vision coverage, as well as various other services
  • This lifetime maximum ban applies to all employer-based plans even if they are exempt due to their status as a grandfathered health plan

What is a lifetime maximum on my health insurance plan?

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A lifetime maximum is the total amount limit that your insurance company agrees to pay. For example, if your lifetime limit for medical services was $500,000, your insurance company would refuse to pay for any more services once you reached that total. Although the Affordable Care Act limits lifetime maximums, they can still be placed on non-essential health benefits, such as vision and dental coverage.

The lifetime maximums that are placed on non-essential services can vary by state and by individual plan. Be aware of what the plan offers and what the maximum limits are before enrolling in a new plan. If it is a lower lifetime maximum, you may wind up paying more out of your own pocket for services that are not covered.

How did the Affordable Care Act affect lifetime maximums?

The Affordable Care Act reformed many aspects of the health insurance industry. One of these changes was the ban on lifetime maximums for essential health benefits. Insurance companies also cannot apply a yearly limit to these benefits.

These new laws apply to all types of plans whether they are employer-based or purchased on or off the healthcare exchange marketplace. Keep in mind that yearly and lifetime limits can still be placed on services that are not considered essential.

What are the 10 essential health benefits?

Under the Affordable Care Act, all health insurance plans must cover the 10 essential health benefits and are restricted from placing a lifetime maximum on these services.

If your employer-based health plan is not compliant with this requirement, it does not meet the minimum essential coverage guidelines under the Affordable Care Act and your employer may be subject to a fine.

The 10 essential health benefits include ambulatory services, hospitalization, and emergency services. Maternity and newborn care is included, as well as mental health services, prescription drug coverage, lab tests, and rehabilitative services.

Preventative services are also covered which can include your annual wellness check up and chronic disease management. Insurance plans must also provide pediatric care coverage, which includes vision and dental care.

It is important to remember that insurance plans are not required to cover vision and dental care and there may be lifetime maximums placed on these particular services. Marketplace health plans are also required to offer coverage for breastfeeding and birth control.

What is a grandfathered health insurance plan?

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If you have a grandfathered health insurance plan, it is not subject to most of the requirements under the Affordable Care Act and may not provide you with the same protections and benefits. A grandfathered health plan must have been in existence prior to March 23, 2010, and have not made any substantial changes to the benefits they offer or significantly increased the cost of the plan.

There are two types of grandfathered health plans. It is possible to enroll in an employer-based job plan after March 23, 2010, if it has not changed, you are notified that it is a grandfathered plan, and one person has been continually enrolled in it since March 23, 2010.

For individual grandfathered plans, it is not possible to enroll new people after the 2010 deadline, but they are offered on a continual basis by insurance companies to those who are already enrolled in them. Insurance companies can choose to stop offering grandfathered plans at any time. However, they must provide you with 90 days notice and other coverage options.

Some Affordable Care Act protections must be applied to all employer-based health plans, including ones with grandfathered status. This includes the ban on lifetime coverage limits and the requirement to cover children until the age of 26.

All plans must also end cancellations without cause, provide you with a summary of your costs and benefits, and spend most of the money you pay towards your insurance plan on your healthcare costs, not administrative fees.

Individual grandfathered health plans do not have to end their yearly limits on coverage. However, they do have to end their lifetime limits. All grandfathered plans do not have to cover preventive services for free, protect your choice of medical provider, and protect your right to appeal coverage decisions.

Does Medicare have any limits?

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For the most part, there is no limit on what services Medicare will cover if they are medically necessary. As with all plans, they cannot place a lifetime coverage amount on your benefits. However, Medicare does impose some financial limits on certain services.

Medicare Part A, which is hospital coverage, will only cover a stay in the hospital for up to 90 days at a time. If you do need to stay in the hospital for more than 90 days with the same medical issue, you do have the option of using one of your 60 lifetime reserve days.

These reserve days allow you to continue your stay, but you are expected to pay a much higher copayment at several hundred dollars a day. You can use these 60 days at any period during your lifetime. However, once you have used them all, you will be responsible for paying the full cost of your hospital stay if you still need more time.

If you have supplemental insurance in addition to your Medicare coverage, you may have more options. All Medigap supplemental plans cover an additional 365 reserve days after your 60 from Medicare are gone and pay the copay for these reserve days. If you also have Medicaid insurance, it will often cover your reserve day copay.

Medicare will only cover 190 days of inpatient stay at a psychiatric facility. This applies to facilities who only provide psychiatric care. There is no limit on mental health services you might receive at a general hospital or a physician’s office. You cannot use any of your reserve days to extend your stay in a psychiatric facility.

There is also a limit on skilled nursing care. Medicare will completely cover it for the first 20 days after you have been in the hospital for 3 days or more. After the 20th day, you will be responsible for paying a portion of the cost.

If you still need skilled nursing care beyond 100 days, you will be responsible for paying the full cost. If you have supplemental insurance, you may be able to have some of these costs covered but it will depend on your insurance plan and the benefits they offer.

Additionally, Medicare places a yearly ban on how much they will pay for physical and occupational therapy, as well as speech pathology. For the year 2014, there was a $1,920 limit for occupational therapy and $1,920 for both physical therapy and speech pathology combined.

The amount is likely to increase every year so should be much higher for 2017. This is the total cost including the 20 percent that you will pay towards the service each time and your Medicare Part B deductible. It is not just the amount that Medicare pays towards it. There are some exceptions to these limits.

If you had a stroke or heart disorder that requires extensive continual therapy, Medicare may elect to continue to pay if your therapist continues to bill them. If you are receiving therapy in an emergency room or hospital that is a medical requirement, Medicare will most likely provide coverage under these circumstances.

Finding Your Limit

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A “lifetime maximum” in health insurance refers to the total amount that your insurance company will pay out towards your medical services over the course of your lifetime. Under the Affordable Care Act, almost all health plans are restricted from placing a lifetime maximum on your coverage for essential health benefits.

Individual grandfathered health plans can still place yearly limits and other types of plans can still place limits on services considered nonessential. Medicare places several limits on certain services that are not considered essential.

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