What does a “lifetime maximum” mean in health insurance?
When you’re reading through your insurance pamphlets, you’ve likely come across the term “lifetime maximum.” But, what does that mean? Below, we’ll go over the definition of a lifetime maximum in reference to insurance, so you can determine how much of a concern it is to you when shopping for insurance.
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Lifetime Maximum Definition
A lifetime maximum is the maximum amount that your insurance benefit will provide during your lifetime. Under most policies, the lifetime maximum applies only to non-essential healthcare services. Therefore, the maximum does not apply to essential services.
Lifetime maximums can be applied to many types of insurance such as dental or long-term but is most commonly associated with health insurance policies.
The Affordable Care Act Changed Health Insurance Lifetime Maximums
The Affordable Care Act (ACA) eliminated maximums being applied for essential health care services. The health care reform act also eliminated insurance company’s ability to place maximum limits on essential services received during a 12-month period. What this means is any health insurance policy issued or renewed after September 23, 2010, has no lifetime benefit maximum or yearly maximum benefits. But the elimination of the maximum amounts only applies to essential services.
The Elimination of Lifetime Maximums Provide Better Health Care to Patients
The elimination of lifetime maximums provides patients with better access to health care. With no maximums to worry about, patients can visit urgent care centers without worrying about the bill not being covered due to insurance maximums.
It is important to remember that insurance companies have the final word when it comes to determining whether a service was essential or not. The problem lies with whether an individual and the insurance company agree that the service is essential to the patient’s health.
Essential Services that May Not Apply to the Maximum Benefit
- Pediatric Services including vision and oral care
- Newborn Care
- Maternity Services
- Ambulatory Patient Services
- Emergency Services
- Rehabilitative Services
- Laboratory services
- Mental Health and Substance Use Disorder Services
- Preventive Services
- Wellness Services
- Chronic Disease Management
What yearly benefits may apply to lifetime maximum benefits?
Now that we’ve gone over what won’t be capped with a maximum benefit, it’s time to talk about what might have a maximum benefit amount applied.
Usually, the only types of coverages that may have maximum benefits applied include vision and dental care. Dental and vision care is considered essential for children, but not for adults.
Do lifetime maximums vary by state?
Insurance companies can vary greatly from state to state. However, lifetime maximums on essential benefits are not permitted in any state. Since 2010, nowhere in the United States has maximum benefits for health insurance been permitted on essential services.
Lifetime maximum benefits for non-essential services vary by state.
Furthermore, these benefits vary greatly from one individual or group health insurance plan to another. In general, more expensive plans provide the insured with more coverage.
With restrictions on non-essential benefits applied on some policies and not others, it’s important for those looking for health care insurance to shop around. For example, if you just opt to buy the most expensive health insurance at first glance, it could end up costing your family more in the long run.
Examples of When Lifetime Maximums May be Applied
It’s important to understand what type of services may be applied to your lifetime maximum and which won’t. This is especially important when you are shopping around for a healthcare plan.
When you’ve narrowed your choices down to one or two, it’s even more important to make sure you’re getting the same type of coverage or at least understand what type of coverage you’re applying for. To help you get a better understanding, we’ve created the following scenario.
Example: Michelle gets a call from her insurance company. They let her know that she is about to reach her lifetime maximum benefit. Michelle immediately wonders what this means?
The insurance company representative on the other end of the phone explains to her that once she reaches her lifetime maximum benefit, her health insurance will no longer cover any non-essential treatments or medications. This happens because insurance benefits for these services are maxed out and no longer available.
Should I be worried about lifetime maximum benefits?
With all the information in mind, many wonder just how concerned they should be with health care insurance and lifetime maximum benefits. The short answer is yes.
Insured individuals should always be conscious of their health insurance’s policy limits and exclusions. Lifetime and yearly maximum benefits are a concern for every policyholder.
These limits identify when your insurance company will stop paying for medical services. However, with the institution of the Affordable Care Act, concerns regarding lifetime maximum benefits has been greatly reduced because it does not apply to essential medical services.
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