QUESTION: Can we make a design change to our self-insured group health plan to impose a $1.5 million annual dollar limit on benefits?
ANSWER: Group health plans and insurers are not permitted to establish annual limits on the dollar amount of essential health benefits for any individual, so your plan may not be amended to add such a limit. Although restricted annual limits were permitted for plan years beginning before January 1, 2014, such limits are now prohibited. Limits may be imposed, however, on specific covered benefits that are not essential health benefits, so long as the limits are permissible under other federal and state laws.
The term “essential health benefits” is defined to include certain general categories (e.g., emergency services, hospitalization, prescription drugs) and the items and services within those categories. Although self-insured health plans (and insured plans in the large group market) are not required to cover all the essential health benefits (unlike insured health plans in the small group market), 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 any 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”).
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