Monday, November 30, 2009

How Health Reform Would Restrict Annual And Lifetime Limits

As the Senate starts to debate health reform, Health Reform Talk begins a series comparing similar, but not identical features of the legislation already passed in the House (H.R. 3962) and the bill being considered in the Senate (H.R. 3590). These are features likely to survive in health reform legislation and which will directly affect employers. For today, provisions regarding annual and aggregate limits in group health plan are considered.

Both the House and the Senate legislation remove limits in annual and lifetime benefits from group health plans, but the two bills do so in different ways:

Senate (H.R. 3590): Sec. 1001 of the bill prohibits a group health plan and health insurers from establishing lifetime limits on the dollar value of benefits or “unreasonable annual limits.” However, the Senate bill does not prohibit self funded health care plans from placing annual or lifetime limits on “specific covered benefits” as long as those limits are not prohibited by law (for example, a limit on AIDS coverage likely would be prohibited by the Americans with Disabilities Act, and a separate limit on mental health coverage would be prohibited by the Mental Health Parity Act).

Sec. 1001 would take effect for plan years beginning on or after six months after the date of enactment.

House (H.R. 3962): Sec. 109 prohibits all group health plans and health insurers from imposing an aggregate dollar lifetime limit on benefits payable under a health plan. This provision would take effect on the date of enactment.

The House bill also prohibits health plans that are required to offer an essential benefits package from imposing any annual or lifetime limit on covered health care items and services. This provision would apply to all plans offered through the Insurance Exchange starting in 2013 (mostly small employer plans) and all employer plans starting in 2018.


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