QUESTION: We are considering making a design change to our self-insured group health plan to impose a $1.5 million annual dollar limit on benefits. Our plan has not before had an annual or lifetime dollar limit on benefits. Is this design change permissible?
ANSWER: Group health plans and insurers are not permitted to establish annual limits on the dollar amount of essential health benefits for any individual. You may be recalling that restricted annual limits were permitted for plan years beginning before January 1, 2014. However, such limits are no longer permitted, and your plan may not be amended to add an annual limit on essential health benefits.
The term “essential health benefits” is defined by statute to include certain general categories (e.g., emergency services, hospitalization, prescription drugs) and the items and services within those categories. Unlike insured health plans in the small group market, self-insured health plans (and insured plans in the large group market) are not required to cover all the essential health benefits. Nevertheless, they are prohibited from imposing annual dollar limits on the essential health benefits they do cover. Group health plans that are not required to cover all the essential health benefits have broad discretion to define essential health benefits for purposes of the dollar-limit prohibition, generally by reference to a Federal Employees Health Benefit Plan or a state benchmark plan. The Centers for Medicare and Medicaid Services maintain a webpage with relevant information about state benchmark plans.
For more information, see EBIA’s Health Care Reform manual at Section IX.A (“Lifetime and Annual Dollar Limits”); see also EBIA’s HIPAA Portability, Privacy & Security manual at Section XII.A (“Lifetime and Annual Dollar Limits”) and EBIA’s Self-Insured Health Plans manual at Section XIII.F (“Dollar Limits and Durational Limits”).
Contributing Editors: EBIA Staff.
