The Annual Benefit Limit is the maximum amount an insurance plan will pay in a calendar year.
Historically, most plans included an annual limit, but the ACA eliminated this limit for most plans, and the new ACA plans have an unlimited annual benefit for Essential Health Benefits.
Annual Benefit Limit vs. Lifetime Limits
There is a difference between Annual Benefit Limits and Lifetime Limits.
Insurance companies can’t set a dollar limit on what they spend on essential health benefits for your care during the entire time you’re enrolled in that plan.
Insurance companies can still set a yearly dollar limit of $2 million on what they spend for your coverage for plan years or policy years starting before January 1, 2014. No yearly dollar limits on essential health benefits are allowed for plan years starting January 1, 2014.
Protections against lifetime limits on coverage apply to all health plans, including grandfathered plans, whether you get coverage through your employer or buy it yourself.
Protections against annual limits apply to most health plans, but they don’t apply to grandfathered individual health plans. Check your plan’s materials to find out if your health plan is grandfathered.
But wait, there are exceptions.
- Insurance companies can still put a yearly dollar limit and a lifetime dollar limit on spending for health care services that are not considered essential health benefits.
- Some health insurance plans may have received a temporary waiver from the rules on yearly dollar limits. Yearly limit waivers end with plan or policy years beginning in 2014, however.