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 total dollar amount your insurance company will pay out during your lifetime for non-essential healthcare.

Lifetime maximum benefit clauses included in healthcare policies do not apply to essential services. Many insurance policies, such as long-term care insurance and dental insurance, use them. Still, a lifetime maximum benefit is most often linked to 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 (ACA) keeps insurance providers from placing maximum limits on essential services.
  • Lifetime maximum benefits can be applied to non-essential care, so it is wise to become familiar with your policy's limits.

How the Affordable Care Act Changed Lifetime Limits

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

Dental and vision coverages included in health care plans may have maximum yearly benefits and lifetime maximum benefits. Oral and vision care are deemed essential for children but not for adults.

No Lifetime Maximum Benefit for Essential Services

Policies issued on or renewed after September 23, 2010, can't have lifetime benefit maximums. The ACA also removes healthcare insurers' ability to place yearly maximums on essential services. As a result, people have access to urgent medical care and treatment without having to worry about exceeding a limit.

These are essential services as 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, so it is important to shop around for prices and to compare plans' items like maximum benefits (both yearly and lifetime) first. Then, you can make a wise choice of health insurance plan.

If your policy has a lower lifetime maximum benefit on non-essential services, you could end up paying much 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, if so, what non-essential services it might apply to. Your health insurance provider monitors the amounts it has paid over your lifetime. It will let 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 those cases, the insurer would have to notify you if you have a grandfathered plan.

Most likely, you'll get a phone call or letter from your health insurance company explaining that you are about to reach your lifetime maximum benefit. It will explain that once you reach your limit, it will 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 mark the point when your insurance stops paying for medical services and directs the costs to you.

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

Access to essential services with no limits greatly improves the quality of life and benefits that insured people have. The ACA reduced consumers' concerns for lifetime maximum benefits, because it no longer applies to essential services.

While it is unlikely, the ACA can always be amended or replaced. If it is, insurance companies might again be able to 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 are severely injured.