By Sabrina Corlette, Georgetown Health Policy Institute

One of the great new patient protections in the ACA is the ban on lifetime and annual limits.  The law, as readers of this blog know, prohibits all plans from imposing lifetime dollar limits on essential benefits and, in 2014, prohibits annual limits on the dollar value of essential benefits.  Before 2014, the law phases in the ban on annual limits over three years. 

For families like the Wustarbarths of Wake Forest, North Carolina, whose toddler daughter hit their plans’ lifetime limit within 3 weeks of a heart transplant, this critical component of the ACA’s patient protections gives them new hope that their children can get needed treatment and reduces their fears of medical bankruptcy.

Today, thanks to early portions of the Affordable Care Act that have already gone into effect, consumers have far more protections in dealing with insurance companies than they have had before.  But, until the Affordable Care Act is fully implemented and all the consumer protection provisions are in place, there are some loopholes that insurance companies can take advantage of, so families should be aware of the following:

• Your plan may not have to comply.The restrictions on annual limits apply to all group plans, but do not apply to grandfathered individual plans.  So if you’ve been buying insurance on your own, your plan can continue to set low annual limits on your benefits.  You could try to find a new plan, but until the full range of protections in the ACA go into effect in 2014, if you or a family member has a pre-existing condition, plans in most states can refuse to issue you a new policy.
• Your plan may get a waiver from HHS. The regulation on the annual limits restrictions allows certain plans to apply to HHS for a waiver if they can show that the restrictions will result in a “significant decrease in access to benefits or a significant increase in premiums.”  Well, guess what – a number of plans are claiming just that.  And so far, HHS has granted 30 plans waivers from the new requirements, including plans offered by big name companies like Jack in the Box, Denny’s, and McDonald’s.  And they’re likely to grant many more.  HHS hasn’t revealed the criteria they’re using to determine whether the annual limit restrictions truly will reduce access to benefits or increase premiums, so it’s hard to know whether these waivers are merited or not.  But the bottom line is: if you’re in one of these plans, you won’t get the benefits of higher annual limits promised under the law.
• The law says “dollar” limits, not service limits!The law restricts annual limits on the dollar value of benefits.  But it does not explicitly restrict plans’ ability to impose limits on, say, the number of doctor visits, days in the hospital, or number of prescriptions filled.  For kids with high-cost chronic conditions, these kinds of limits are no different than a dollar value limit.
• The restrictions depend on plans’ “good faith” compliance with the statute.  The restrictions on lifetime and annual limits apply only to benefits covered in the “essential benefits package.”  But, you say, we don’t know what’s in the essential benefits package – it hasn’t been defined yet!  Well, this is where things could get Kafka-esque.The regulation on annual and lifetime limits depends on plans and employers making “good faith” efforts to define essential benefits.  But who gets to decide what “good faith” means when no one knows what the essential benefits are?  Unfortunately, as we heard yesterday from one family in North Dakota, employers, insurance companies, state regulators, and HHS may be dropping the ball – leaving families without access to needed care and financially vulnerable.  In this case, the family’s employer plan announced that they would be imposing new limits on physical, speech, and occupational therapy benefits.  The company’s HR department refused to take action, and when the family complained to the state insurance department, the department declined to act, claiming that HHS had not yet defined “rehabilitative and habilitative services” as essential benefits (never mind that it’s clearly a covered category of benefits under the ACA!) Meanwhile, HHS is saying it will be late 2011 before they produce any kind of definition of the essential benefit package.  For families who have been promised relief under the new law, this is cold comfort.

So…what are families, and those who advocate on their behalf to do? 

First – states can and should strengthen the law.  States could enact laws requiring grandfathered plans to comply with the annual limit restrictions.  State regulators could and should set robust standards for what constitutes a “good faith” effort to define essential benefits, and vigorously monitor plans’ compliance with the law.

Second – while it’s probably too much to hope that the Administration can speed up its rulemaking on the essential benefit package, HHS can and should be working closely with state insurance departments to hold plans accountable if and when they attempt to subvert the “good faith” requirement by claiming certain benefits are not in the “essential” package.

Third – the Administration should issue further guidance on the permissibility of item and service limits.  The Administration should clearly say that if a plan places limits on the number of visits, days in the hospital, or number of prescriptions, it constitutes a “constructive” dollar limit and would thus violate the annual limit requirements of the ACA.  There is precedent for this in the Mental Health Parity law which has a similar restriction on plans’ ability to limit the number of visits without falling afoul of the prohibition on lifetime and annual limits.

Fourth – HHS needs to be more transparent about what plans are applying for waivers, what justifications they’re giving, and what criteria the agency is using to grant waivers.  In addition, any plan that gets a waiver should be required to disclose that information to its policyholders.

As advocates, it’s difficult for us to accept any shortfalls in the law that allow families to fall through the cracks.  And we’re eager to get to 2014, when the full range of insurance reforms go into effect and the law delivers on its promise of more affordable, quality care for all Americans.  But, as a New York Times article noted today, “The hardest part of health reform is always going to be the transition.”  We’ll get there – we just need to recognize there will be bumps in the road and work together to fix them.

The views expressed by Guest Bloggers do not necessarily reflect the views of the Center for Children and Families.