FACT SHEET
Eliminating Costly Caps on Coverage
MAY 2012
Traditionally, many private health insurers limit liability for costly health care claims by
setting annual or lifetime limits on the total amount of money they will pay in benefits per
enrollee – leaving patients responsible for all costs after they hit the cap. The Affordable
Care Act (ACA) eliminates these limits so women and families are confident that their health
insurance will be there when they need it most.
How Does The ACA Protect Women
from Coverage Limits?
As of September 23, 2010, the ACA prohibits all private
health insurance plans from applying lifetime limits on
essential health benefits.1
More than 67 million women and
children are enrolled in plans that
had to eliminate lifetime limits on
coverage because of the ACA.2
 This means that a health plan can no longer set a
cap on the total amount of money it will spend on most covered benefits for the entire
time an individual or family is enrolled.
 More than 67 million women and children are enrolled in plans that had to eliminate
lifetime limits on coverage under the ACA.
Between 2010 and 2014, the ACA phases out annual limits – caps on the total amount of
money a health plan will spend on essential health benefits for an individual or family in a
given plan year.2
 Plans issued or renewed on or after September 23, 2010 cannot set annual limits below
$750,000.
 Plans issues or renewed on or after September 23, 2011 cannot set annual limits below
$1.25 million.
 Plans issues or renewed on or after September 23, 2012 cannot set annual limits below
$2 million.
 Beginning January 1, 2014, all annual limits on essential health benefits are banned.
Why Is This Important?
Before passage of the ACA, the vast majority of people enrolled in individual market
plans3 and more than half of all workers with employer-sponsored coverage4 had a
lifetime limit on coverage.
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 For employer plans, the most common lifetime limits were between one and two
million dollars.5
 Many people never hit these limits, but women and children with serious chronic
conditions – like cancer or genetic disorders – or rare, life-threatening diseases and
infections can wrack up millions of dollars in claims, needing lengthy or repeat
hospitalizations and costly drugs and devices.
Annual limits are less common than lifetime limits
but can be even more problematic by offering the
illusion of coverage where it doesn’t actually exist
because caps are set so low.
 The worst offenders on the market are
limited benefit plans, also known as minimed plans, which have been popular in the
individual and small employer market due to
their low premiums. These plans are
notorious for having annual limits as low as
just a few thousand dollars.6
A 2006 survey found that 10% of
cancer patients reached the limit
of what their insurance would pay
for treatment.
—National Survey of Households Affected by
Cancer, USA Today/Kaiser Family Foundation/
Harvard School of Public Health, November
2006
 Even plans with higher annual limits, such as $50,000 to $100,000, can leave women
– who are more likely to report having three or more multiple chronic conditions7 –
with unaffordable medical bills.
Once a woman hit her plan’s limit – after already paying sizable premiums and costsharing – she was responsible for all subsequent medical costs for the duration of the limit
unless she could find a new source of coverage. However, finding new coverage with a
pre-existing condition remains difficult until 2014, when the ACA will prohibit pre-existing
condition denials and expand Medicaid eligibility.8
What Plans Are Affected?
The prohibition on lifetime limits applies to all new private health plans – including both
individual and employer-sponsored plans – and nearly all private health plans are subject
to the phase out of annual limits.
 The only plans that are exempt from the ban on annual limits are “grandfathered”
individual market plans.
 These plans existed prior to passage of the ACA and are exempt from certain
requirements so long as they do not make major changes, like raising costsharing requirements or reducing benefits.
 Most individual market plans are expected to cease to have grandfathered
status prior to 2014.9
For more information, contact Kirsten Sloan, Vice President at 202.986.2600 or
[email protected].
NATIONAL PARTNERSHIP FOR WOMEN & FAMILIES | FACT SHEET | ELIMINATING COSTLY CAPS ON COVERAGE
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1 Essential health benefits include ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder
services (including behavioral health treatment), prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and
chronic disease management, and pediatric services (including oral and vision care).
2 Plans may receive temporary waivers to lower the annual limit thresholds from 2010 to 2014 if compliance with the law would significantly increase premiums or decrease
access to benefits. (Plans granted a waiver must alert consumers that it has restrictive limits. If unsure of their plan’s status, women should check with their insurance carrier.)
Most student health plans are also subject to a modified phase out of annual limits. However, both waiver plans and student health plans must comply with the complete ban
on annual limits beginning in 2014.
3 http://aspe.hhs.gov/health/reports/2012/LifetimeLimits/ib.shtml#_ftn2
4 http://pwchealth.com/cgi-local/hregister.cgi/reg/The_impact_of_lifetime_limits.pdf
5 http://pwchealth.com/cgi-local/hregister.cgi/reg/The_impact_of_lifetime_limits.pdf
6 http://www.consumerreports.org/cro/consumer-reports-magazine-march-2012/cheap-health-insurance.html
7 KFF Women’s Health Policy Facts: Medicare’s Role for Women. Available at: http://www.kff.org/womenshealth/upload/7913.pdf
8 For more information on expanding access to affordable health coverage under the ACA, see the National Partnership’s factsheet: Why the Affordable Care Act Matters for
Women: Expanding Access to Health Insurance
9 Grandfathered plans are required to disclose their grandfathered status to enrollees in any materials describing benefits. If unsure of their plan’s status, women should check
with their insurance carrier.
The National Partnership for Women & Families is a nonprofit, nonpartisan advocacy group dedicated to promoting fairness in the workplace, access to quality health care and
policies that help women and men meet the dual demands of work and family. More information is available at www.NationalPartnership.org.
© 2012 National Partnership for Women & Families. All rights reserved.
NATIONAL PARTNERSHIP FOR WOMEN & FAMILIES | FACT SHEET | ELIMINATING COSTLY CAPS ON COVERAGE
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