Health Overhaul Brings Ban On Lifetime Benefit Caps

Among the new provisions of the health law that take effect later this month is a ban on something most people don’t even know they have – a lifetime limit on benefits covered by their health insurance.

Starting late next week, new health plans or plans that are renewed, won’t be able to cap the dollar amount of benefits they cover. No more yearly caps either, though those limits will be phased out over three years, disappearing entirely in 2014.

The change apply even to health plans that don’t have to abide by some new rules because they were “grandfathered” under the health law.

Karen Pollitz, head of an office at the Department of Health and Human Services to help consumers navigate overhaul, says it’s a big change:

This is sort of the ultimate example of what insurance is for. We’re buying protection against the financial ruin that comes with a very expensive medical condition or injury as well as assurances that we’ll be able to connect to the care we need to get better. So when you hit the lifetime limit, you often lose access to the treatment, not to mention your house.

Until now, many people with expensive chronic conditions simply considered it their lot in life to have to change jobs every couple of years in order to maintain coverage.

Take Edward Burke, of Palm Harbor, Florida. Burke, who has hemophilia, and has “capped out,” as those with chronic conditions call it, twice in the past seven years. “I would have capped out four or five times,” he says, but for the fact that the industry he works in, home health care, had been going through a series of mergers and acquisitions. So every time his company was bought and changed names, he was lucky enough to start with new health insurance – and a new lifetime limit.

Burke estimates he spends about $900,000 per year on factor VIII, which replaces a clotting factor he lacks. That makes chewing through a lifetime limit of even several million dollars a matter of when, not if.

But it’s not just people who know they will have high medical bills who are at risk. “It could happen to any of us,” says Pollitz, who said she had a friend who had twins born prematurely. “And before their first birthday, the father had hit the lifetime limit on his family’s coverage because of all the health problems they had.”

Even so, relatively few people are affected by the change. So HHS estimates that the added premium cost of making health plans eliminate lifetime limits is modest – adding about a half a percentage point to group health plans and three-quarters of a percentage point to individual policies.

But for people like Edward Burke, not to have to worry about “capping out,” anymore, as he says, “is huge. It’s just huge.”

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