Lifetime Limits on Health Care: Medicaid, Medicare, and Private Plans

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, and others have even introduced work requirements to determine eligibility.

A Medicaid proposal in Kansas went so far as to request a three-year cap on coverage to their state program, meaning that after a certain number of dollars were spent on your behalf, you would be denied further coverage during that time. The Centers for Medicare & Medicaid Services ultimately denied the request in 2018.

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. The Medicaid proposal was not the first time coverage limits were set by 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 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 pre-existing conditions, but with annual and lifetime limits as well, at least when it comes to essential health benefits. No longer would the sickest people be left without health care 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 2023, days 61 to 90 will require a coinsurance of $400 per day. After 90 days, the beneficiary will pay all costs out of pocket or otherwise dip into their lifetime reserve days. In this case, they will pay $800 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. Though lifetime coverage limits have been denied at this time, there are other limits set by the program.

As of November 2020, Indiana and Utah implemented work requirements for Medicaid eligibility. Arizona, Georgia, Nebraska, Ohio, South Carolina, and Wisconsin have had their waivers for work requirements approved, but they have not yet been implemented. Other states, including Idaho, Mississippi, Montana, Oklahoma, South Dakota, and Tennessee, have work requirement waivers pending.

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. It also limits how many people can access the program, indirectly setting limits on coverage.

Summary

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. At this time, there are no lifetime limits for Medicaid, though it has become increasingly difficult to get coverage in some states.