What the Rule Is
The ACA prohibits group health plans from placing lifetime or annual dollar limits on Essential Health Benefits (EHBs).
- A lifetime limit caps the total dollar amount a plan will pay for a person’s benefits over their entire time on the plan.
- An annual limit caps the dollar amount a plan will pay in a single plan year.
Before the ACA, these limits could leave people with serious health conditions without coverage once they hit the cap.
Which Plans It Applies To
The rule applies to all group health plans: fully insured, self-funded and level-funded, of any size, including grandfathered group plans. The lifetime limit ban has applied since 2010, and the annual limit ban since 2014.
How It Works with EHBs
- Small group plans (fully insured, non-grandfathered) must cover all ten EHB categories, so none of the benefits in those categories can have annual or lifetime dollar limits.
- Large group, self-funded and level-funded plans don’t have to cover every EHB category. But for any EHBs they do cover, they can’t impose annual or lifetime dollar limits.
Limits That Are Still Allowed
- Non-dollar limits, such as a set number of visits per year, as long as they meet other applicable rules, like the Mental Health Parity and Addiction Equity Act for mental health and substance use disorder benefits
- Dollar limits on benefits that aren’t EHBs
Important: This information is provided for general educational purposes. It is not legal or tax advice. How these rules apply depends on each employer’s specific circumstances, so employers should review their situation with their own legal counsel, ERISA attorney, CPA or tax advisor.