Lifetime Maximum Benefit

Does a Lifetime Maximum Apply to All Services or Health Plans?

Definition of lifetime maximum benefit and what it means
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The lifetime maximum insurance benefit is the maximum dollar amount that your insurance company will pay out during your lifetime for non-essential healthcare services.

Lifetime maximum benefit clauses included in health care policies do not apply to essential services. Although many insurance policies use lifetime maximums such as long-term care insurance and dental insurance, a lifetime maximum benefit is generally associated with health insurance.

Key Takeaways

  • Lifetime maximum benefits are the dollar limit that a health insurance policy will cover over your lifetime.
  • The Affordable Care Act keeps insurance providers from placing maximum benefits limits on essential services.
  • Lifetime maximum benefits can be applied to non-essential care, so you should be familiar with your policy's limits.

Changes to Lifetime Maximum Benefits Since the Affordable Care Act (ACA)

The ACA, also known as the Patient Protection and Affordable Care Act (PPACA) or Obamacare, eliminated lifetime maximum benefit clauses in healthcare policies pertaining to essential services.

Dental and Vision coverages included in health care plans may have maximum yearly benefits and lifetime maximum benefits. Although oral and vision care is considered essential for children, they are not regarded as essential services for adults.

No Lifetime Maximum Benefit for Essential Services

Since 2010, policies issued on or renewed after September 23, 2010 are required to have no lifetime benefit maximums. The Affordable Care Act also removes healthcare insurers' ability to place yearly maximums on essential services.

This has changed healthcare insurance substantially as it means that people have access to urgent medical care and treatment without having to worry about exceeding a limitation.

The following list includes essential services defined by the ACA:

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Pregnancy, maternity, and newborn care 
  • Mental health and substance use disorder services
  • Rehabilitative services and devices 
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care
  • Prescriptions

Do Lifetime Maximum Benefits Vary by State?

Lifetime maximum benefits for essential services are not permitted in any state. There are no lifetime or yearly maximum benefits clauses for essential services anywhere in the United States. However, lifetime maximum benefits for non-essential services may vary by state and health insurance plan.

More expensive plans may provide additional coverage, which is why it is important to not only shop around for prices but to compare items like maximum benefits (both yearly and lifetime) per plan before selecting your health insurance plan.

If your policy has a lower lifetime maximum benefit on non-essential services, you could end up paying significantly more long-term once the yearly or lifetime maximum is reached.

How a Lifetime Maximum Benefit May Be Applied 

You should know whether there is a lifetime maximum benefit in your health insurance plan and what non-essential services it might apply to. Your health insurance provider monitors the amounts they have paid over your lifetime, and will notify you when you're closing in on your non-essential services limit.

The only exceptions to the laws are when it comes to grandfathered health plans. In these cases, the insurer would have to notify you if you have a grandfathered plan.

You'd likely receive a phone call or letter from your health insurance company explaining that you were about to reach your lifetime maximum benefit. The insurance company will explain that once you reach your lifetime maximum benefit they would no longer cover your non-essential treatments or medication.

Are Lifetime Maximum Benefits a Concern?

You should always become familiar with the policy limits and exclusions of your health insurance policy. Lifetime or annual maximum benefits are a concern for every policyholder because they indicate the point at which your insurance stops paying for medical services and directs the costs to you.

The definition of essential services and the role the legislation has played in helping people with health insurance get fair and adequate protection has changed the level of concern in this aspect of health insurance coverages.

Having access to essential services without restrictions like maximum lifetime benefits substantially improves the quality of life and benefits insured people have. The Affordable Care Act reduced consumers' concerns for lifetime maximum benefits because it no longer applies to essential services.

However, the ACA can be amended or replaced. If it is, insurance companies might again enforce the maximum benefit limits for all services. It is important to be concerned about maximum benefits because if they are brought back, they can put your health and finances at risk as you age or if you're severely injured.