Lifetime Limits on Healthcare: Medicaid, Medicare, and Private Plans

When Time Runs Out

Lifetime Limits Medicaid Medicare Private Insurance
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Most people pay for their health care. How much they pay depends on the health plan they use.

Whether someone is on Medicare, a Health Insurance Marketplace plan, an employer-sponsored insurance, or another private insurance plan they will have to pay monthly premiums to use that plan. They will also pay deductibles as well as copayments and coinsurance for services they receive.

Medicaid, however, works a bit differently. Depending on the state, Medicaid services may be free to certain populations. Some but not all states will require premiums; some will require copayments. Some states have even introduced work requirements to determine eligibility. The latest Medicaid proposal is to add lifetime limits to the program.

Regardless of the health plan used, it could be alarming to learn that, even if someone pays their share, their benefits could be taken away after a certain period of time, regardless of health or need. If the Medicaid proposal goes through, it would follow a long line of lifetime limits set by past insurers.

Lifetime Limits on Private Insurance

Before the Affordable Care Act (ACA) passed in 2010, private insurance companies had the leeway to add lifetime limits to their plans.

Not only did insurers increase the cost of premiums for people who had pre-existing conditions, they stopped paying for care after a certain dollar amount had been spent. Whether there was an annual limit or a lifetime limit (the amount of someone was enrolled in a plan) set on how much the insurer would pay, beneficiaries would get stuck with all remaining costs after the limit was reached.

Thankfully, the ACA did away not only with preexisting conditions but with annual and lifetime limits, at least when it comes to essential health benefits. No longer would the sickest people be left without healthcare when they needed it most.

Lifetime Limits on Medicare

Medicare is the federal program that provides care for the elderly and/or those with qualifying disabilities.  Part A, one of four parts of Medicare, provides coverage for inpatient hospital admissions, short-term stays in skilled nursing facilities, and hospice.

While many people do not have to pay premiums for Part A, that does not mean it is free. Deductibles and coinsurance must be paid for services rendered in each benefit period. There are also lifetime reserve days to consider.

Part A covers 90 days in the hospital for any benefit period. After paying the deductible, the first 60 days are free to the beneficiary. In 2018, days 61 to 90 will require a coinsurance of $335 per day. After 90 days, the beneficiary will pay all costs out of pocket or otherwise dip into their lifetime reserve days. I this case, they will pay $670 per day for each lifetime reserve day. Each person has a maximum of 60 such days they can use over their lifetime.

Lifetime reserve days can be used in one hospital stay or across multiple stays. It depends on the needs of each person.

Lifetime Limits for Medicaid

Medicaid is jointly funded by the federal and state governments but is run by the states. While the federal government sets the minimum standards for Medicaid coverage, each state can propose changes to those standards through 1115 Medicaid waivers.

To date, Indiana and Kentucky have had waivers approved by the federal government to include work requirements for Medicaid eligibility. The idea is that "able-bodied" people should be encouraged to work. Doing so would increase the odds that they would gain access to employer-sponsored plans, instead of relying on Medicaid. Eight others states, including Arizona and Maine, have work requirement waivers pending.

Now, five states are proposing lifetime requirements on benefits. Children, pregnant women and people with disabilities would be exempt from coverage limits. In fact, it seems that "able-bodied" Americans are being targeted by the states when it comes to lifetime limits.

Arizona and Maine have linked their lifetime limits to work requirements. The clock only starts ticking when people do not meet the work requirements for that state. Kansas, Utah, and Wisconsin are pursuing lifetime limits for childless adults whether or not they meet work requirements. Of note, many childless adults only became eligible for the program after Medicaid expansion.

State Work Requirements Duration
Arizona Yes 5 years
Kansas No 36 months
Maine Yes 36 months*
Utah No 5 years
Wisconsin No 48 months

*Maine aims to limit coverage to only three months during any 36-month period.

Concerns have been raised about these proposals.

First and foremost, not all low-wage employers offer health coverage. Even if someone meets the work requirements, they may not have access to other forms of health care. Lifetime limits would penalize people based on their employer's policies, something that is not within their control.

Others argue that Medicaid is intended to be a safety net, not a welfare program. People who are sick and in crisis could have their insurance coverage taken away when they need it most. It becomes a moral issue.

A Word From Verywell

In 2010, the ACA stopped private insurers from imposing lifetime limits on essential health benefits, although they could still impose limits on other services. Medicare limits how many hospital days it will cover. Now Medicaid may propose lifetime limits, too. Five states have submitted 1115 waivers to request changes to their Medicaid programs. Whether it relates to work requirements or to Medicaid expansion, people could soon face decreased access to health care.

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