limited-benefit plan

What is a limited-benefit plan?

Limited-benefit plans are medical plans with much lower and more restricted benefits than major medical insurance. Limited-benefit plans include critical illness plans, indemnity plans (policies that only pay a pre-determined amount, regardless of total charges), and “hospital cash” policies. Short-term health insurance policies are also considered a type of limited benefit plan, as they only provide coverage for a short time and do not cover all of the essential health benefits.

Limited benefit plans are not regulated by the Affordable Care Act and are not suitable to serve as a person’s only medical coverage. But some types of limited benefit plans can be a good supplement to a high-deductible major medical plan, or any major medical plan that has high out-of-pocket costs.