Lifetime and Annual Limits
Lifetime maximum limits are used to indicate a lifetime (not an annual) maximum payment, such as a $50,000 limit on all payments after age 65. Annual limits (caps) are used to specify an annual limit on the employer cost of a benefit, such as a $5,000 limit on claims to be paid each year.
Once specified, lifetime or annual limits are applied to a benefit (or set of benefits) under the Lifetime and Annual Limits topic of a Plan Definition.
For calculation details, see the Technical Reference article Lifetime maximum and annual limit calculations.
Name is a text field in which to enter a description of the limit. This may be any descriptive phrase, including spaces.
Each lifetime maximum or annual cap Applies to either Actives or Inactives.
Select the Type of claims Limit, either a Lifetime maximum or an Annual cap. The original amount of the limit, the Initial limit, may be specified as a:
Constant dollar amount as of the Valuation Date (or baseline Valuation Date in a forecast) or, for active members, as of the date of decrement from active status;
database Field (for inactive members only) containing the dollar amount of the limit as of the Valuation Date (or baseline Valuation Date in a forecast);
Benefit formula (for active members only) defining the amount of the limit as of the date of decrement from active status.
A field or formula is useful when the limit varies by division, location, status, etc., or has a different value for each participant (e.g., a medical spending account).
For inactive members, the Initial limit amount entered, or contained in a database field, for a Lifetime maximum should include any increases granted after the decrement from active status occurred, such as refreshes of the limit (discussed below) and, similarly, the Initial limit amount for an Annual cap should include any increases granted after the Valuation Date.
If the limit is renewed at Medicare age (see the following parameter discussion), the dollar amount, field or formula specified for the Initial limit applies only to pre-Medicare age claims.
If the Renew at Medicare age box is checked, you may specify a Renewed limit (renewed once the Medicare Coverage Age specified under the Plan Attributes topic is attained). This permits separate limits on pre-Medicare age and post-Medicare age claims. The original amount of a Renewed limit may be specified as a:
Constant dollar amount as of the Valuation Date (or baseline Valuation Date in a forecast) of the limit on post-Medicare age claims or, for active members, the dollar amount of the post-Medicare age claims limit as of the date of decrement from active status;
database Field (for inactive members only) containing the dollar amount as of the Valuation Date (or baseline Valuation Date in a forecast) of the limit on post-Medicare age claims;
Benefit formula (for active members only) defining the amount of the limit on post-Medicare age claims as of the date of decrement from active status.
A field or formula is useful when the limit varies by division, location, status, etc., or has a different value for each participant (e.g., a medical spending account).
For inactive members, the Renewed limit amount entered, or contained in a database field, for a Lifetime maximum should include any increases granted after the decrement from active status occurred, such as refreshes of the limit (discussed below) and, similarly, the Renewed limit amount for an Annual cap should include any increases granted after the Valuation Date.
For actives, if you select the Benefit formula option, click the Edit button to define the formula for the Initial limit and/or Renewed limit.
For a Lifetime maximum for inactive members, specify the database field that contains the accumulated value of Payments-to-date for the limit that applies currently, that is, as of the Valuation Date (or baseline Valuation Date in a forecast). This amount represents how much of the original lifetime maximum limit, including any increases granted since the decrement from active status occurred, has been used up prior to the Valuation Date by claims applied against it. (Payments-to-date do not apply to an Annual cap or for actives.) If the limit is renewed at Medicare age, then the field specified for the Initial limit applies only to pre-Medicare age claims and the field specified for the Renewed limit applies only to post-Medicare age claims. Although accumulated payments to date may be specified for both the initial limit and the renewed limit, in most cases a field will be specified for only one of these limits. However, if the lifetime maximum is applied to the sum of member and spouse benefits (i.e., a family maximum) and the member’s and spouse’s individual ages are considered against Medicare eligibility age, both the initial and renewed limits might currently apply. For example, for a spouse age 62 and member age 70, projected spouse claims for the next 3 years (ages 62, 63 and 64) will apply against the pre-Medicare limit (assuming a Medicare age of 65). Projected member claims and spouse claims beyond 3 years will apply to the post-Medicare limit.
Note: When the lifetime maximum represents a medical spending account, it may be more convenient to set the lifetime maximum and payments-to-date equal to the outstanding balance and zero, respectively. Otherwise, both of these inputs should be accumulated with interest.
The Future payments (to apply against limit) parameter determines which projected claims apply against the limit. Regardless of whether Gross benefit or Net benefit (gross benefit – participant contribution) is selected, for a limit Type of Lifetime maximum, both the gross benefit and participant contribution will be set to zero after the limit is reached.
You may refresh the limit, that is, increase it in the future, by checking the Increase limit box and completing the remaining parameters, which become accessible.
For a Lifetime maximum, you may apply dollar increases every year for all participants (regardless of whether the limit has been reached by claims payments applied against it) or you may apply increases just for participants who hit the limit, in the year after the year in which the claims payments received reach the limit. Enter, in the text fields for the Annually and When hitting limit parameters, respectively, the dollar amount of annual increase in the lifetime limit or the dollar amount by which the lifetime limit will be increased when it is hit. In either case, you can specify a different increase amount after Medicare age if the Change at Medicare age box is checked. If both the Renew at Medicare age box and the Change at Medicare age box are checked, the pre-Medicare increase amount will apply to the Initial limit and the post-Medicare increase amount will apply to the Renewed limit. If Annually is selected, you can also check the box Apply increase rates to outstanding balance to apply increase rates entered in Valuation Assumptions and/or Projection Assumptions to the outstanding balance of the limit after reduction by claims applied against it.
For either a Lifetime maximum or an Annual cap, select Apply increase rates to limit to apply increase rates entered in Valuation Assumptions or Projection Assumptions to the limit.