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How The Affordable Care Act Affects Health Insurance Benefit Caps

2011-08-26

There have been many changes to the health insurance industry with the passage of The Affordable Care Act. The Affordable Care Act has had a tremendous impact on health insurance companies' liability. Now, health insurance companies are no longer be able to place the same benefit caps as they have in the past to limit the time or amount of benefits that are available to insureds over the course of a year or their lifetime.

The Affordable Care Act offers many benefits to individuals that were not once available before. Insureds who are in need of on-going medical care will no longer suffer with the passage of The Affordable Care Act. Now, health insurance companies will not be able to place benefit caps on either annual or lifetime spending limits. The ban on lifetime or annual spending restrictions is extremely important for insureds that require on-going health care.

In the past, insurance companies had benefit caps in place to limit the amount of benefits health insurance companies would be responsible for to a certain dollar or amount in a particular time period. These caps were put in place to limit a health insurance company's liability. Although they were beneficial to health insurance companies as a whole, these caps were detrimental to insureds with on-going medical needs. Quite often, insureds would often be cut-off by health insurance companies because they had exhausted their benefits or reached certain benefit caps in place.

With the passage of the Affordable Care Act, insurance companies can no longer place benefit caps on health insurance benefits offered to certain insureds. Insureds that were limited to lifetime benefit caps in the past will no longer be refused benefits should their medical treatment reach or exceed a stated limit during their lifetime. In addition to restrictions on lifetime benefit caps, the Affordable Care Act also places restrictions on annual benefits caps as well. Now, health insurance companies cannot cut insureds off, as they have in the past, once they used a certain dollar amount of their health insurance benefits annually.

The Affordable Care Act's restrictions on benefit caps apply to certain policies that have been renewed or issued on or after September 23, 2010. With respect to employee related health benefits, the restrictions on benefit caps are a bit different. Employee issued health insurance plans are restricted from placing benefit caps lower than certain amounts. When and how much of a cap can be placed depends on when the health insurance was issued or renewed.

Clearly, the Affordable Care Act has had a beneficial impact on benefit caps by limiting or reducing what health insurance companies can and must offer to their insureds.

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