May 2010 Health Care Reform Insights, "Prohibition on Lifetime and Annual Limits"
The new health care reform law contains a provision stating that group health plans cannot establish a lifetime or annual limit on the dollar value of benefits. Plans are permitted to place lifetime and annual limits on specific covered benefits that are not considered essential benefits under the new health reform law.
This provision applies to group health plans in existence when the law was enacted (often called grandfathered plans). Group health plans must comply with this requirement as of the first plan year that begins on or after October 1, 2010. For calendar year plans, the compliance date is January 1, 2011. However, for plan years that begin before January 1, 2014 (i.e., calendar years 2011 through 2013), plans may have restricted annual limits (to be defined by the federal government) on the dollar value of benefits considered essential benefits. The law contains a provision with a delayed effective date for collectively bargained plans. However, it is unclear how this provision applies. Therefore, legal counsel should be consulted about the effective date for collectively bargained plans.
This issue of Health Care Reform Insights discusses the rule and implications for plan sponsors. It lists benefits that must be included in the definition of essential benefits.