What Is a Lifetime Maximum Benefit?

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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 health care. Lifetime maximum benefit clauses included in health care policies don't apply to services that are deemed to be "essential health benefits" under the Affordable Care Act (ACA).

Many insurance policies, such as long-term care insurance and dental insurance, use these provisions, but lifetime maximum benefits are 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) prevents insurance providers from placing maximum limits on essential health benefits.
  • Lifetime maximum benefits can be applied to non-essential care.

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 health care policies for essential services in 2010 when the legislation went into effect.

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 or renewed on or after Sept. 23, 2010, can't have lifetime benefit maximums. The ACA also removes health care insurers' ability to place yearly maximums on essential health benefits. People have access to urgent medical care and treatment without having to worry about exceeding a limit as a result.

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 health benefits are not permitted in any state. There are no lifetime or yearly maximum benefits clauses for essential services anywhere in the U.S. But lifetime maximum benefits for non-essential services can vary by state and by health insurance plan.

More expensive plans may provide additional coverage, so it's important to shop around for prices and to compare plans' various provisions, such as yearly and lifetime maximum benefits. Then you can make a wise choice when selecting a health insurance plan.

You could end up paying much more in the long term after the yearly or lifetime maximum is reached if your policy has a lower lifetime maximum benefit on non-essential health benefits.

How a Lifetime Maximum Benefit May Be Applied 

You should know whether there's 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 that it's paid over your lifetime. It will let you know when you're closing in on your non-essential services limit.

The only exceptions to these laws involve grandfathered health plans. The insurer would have to notify you if you have a grandfathered plan in this case.

Are Lifetime Maximum Benefits a Concern?

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. But the definition of essential health benefits and the role the ACA has played in helping people with health insurance get fair and adequate protection have changed the level of concern.

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

Frequently Asked Questions (FAQs)

How can I know that a lifetime maximum benefit is being applied?

You'll most likely get a phone call or a letter from your health insurance company explaining that you are about to reach your lifetime maximum benefit if you're not protected by ACA provisions. It should explain that it will no longer cover your non-essential treatments or medication after you reach your limit.

Can the protection offered by the ACA be undone or eliminated?

The Affordable Care Act can always be amended or replaced, although it seems unlikely. Insurance companies might again be able to enforce the maximum benefit limits for all services if this occurs. It's important to keep an eye on the situation because it can put your health and finances at risk as you age or if you're severely injured and lifetime maximum benefits have been brought back.

Article Sources

  1. GovInfo. "Patient Protection and Affordable Care Act," Page 124 Stat. 131.

  2. Centers for Medicare & Medicaid Services. "Information on Essential Health Benefits (EHB) Benchmark Plans."

  3. Federal Register. "Patient Protection and Affordable Care Act: Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, and Patient Protections," Pages 37188-37189.

  4. GovInfo. "Patient Protection and Affordable Care Act," Pages 124 Stat. 163–164.

  5. Centers for Medicare & Medicaid Services. "Affordable Care Act Implementation FAQs - Set 14."

  6. Department of Health and Human Services. "Grandfathered Health Insurance Plans."