Annual Limit

A cap on the benefits your insurance company will pay in a year while you're enrolled in a particular health insurance plan. These caps are sometimes placed on particular services such as prescriptions or hospitalizations. Annual limits may be placed on the dollar amount of covered services or on the number of visits that will be covered for a particular service. After an annual limit is reached, you must pay all associated health care costs for the rest of the year.

A cap on the benefits your insurance company will pay in a year while you’re enrolled in a particular health insurance plan. Caps are sometimes placed on particular services such as prescriptions or hospitalizations. Annual limits may be placed on the dollar amount of covered services or on the number of visits that will be covered for a particular service. After an annual limit is reached, you must pay all associated health care costs for the rest of the year.

Many health insurance plans have historically placed dollar limits upon the claims the insurer will pay over the course of a plan year. The ACA restricts annual limits for essential benefits for plan years beginning after Sept. 23, 2010. The cap on annual limits is $750,000 for plan years starting on or after September 23, 2010 but before September 23, 2011 and will increase each year until January 1, 2014 when plans can no longer have annual limits. Grandfathered plans in the individual market are not required to follow the ACA requirements on annual limits. Some plans may be eligible for a waiver from the rules concerning annual dollar limits, if complying with the limit would mean a significant decrease in benefit coverage or a significant increase in premiums.

Many health insurance plans place dollar limits upon the claims the insurer will pay over the course of a plan year. PPACA prohibits annual limits for essential benefits for plan years beginning after Sept. 23, 2010.