The Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010 (the "Act") includes numerous changes to the way insurers and employers will do business. One of the changes is that an insurer can no longer limit annual dollar amounts paid on a health insurance policy. This is good news for many consumers. The downside may be that health insurance quotes are likely to go up slightly in the process.

In the past if a consumer enrolled in a health insurance plan there may have been limits on how much would be paid out in medical benefits over the course of a year. The most common limit is $1.5 million dollars. This means that a policyholder reaches this limit and any medical expenses that they incur after that date for the year must be paid by them. This has affected people who got serious illnesses and therefore ran up large medical bills.

This legislation does allow the insurer to have annual limits that will be phased out by the beginning of 2014. The first year the limit is $750,000. The second year the limit is raised to $1.25 million and the last part of the period the allowable limit is $2 million.

There is a provision in the Act which still allows the insurer to set annual limits on benefits that are covered under the plan but not considered "essential health benefits". One of the issues still to be decided is what the definition of "essential health benefits" will be. Until that decision is made the government says that it will enforce the regulation by looking at the insurer's effort to make a reasonable interpretation and apply it to all policyholders consistently.

The Act allows existing health plans to be "grandfathered" and so exempt from the new law. But if the insurer lessens the annual dollar amounts limit after the law was passed then they will lose their grandfathered status. If they did not have an annual limit they cannot add one unless it is being replaced by an annual limit is at least as high as the lifetime limit. New health insurance quotes and policies will have to comply with the Act.

The law applies only to health plans and does not apply to "excepted benefits" such as dental or vision policies. It is not yet clear whether annual dollar amounts limits will be allowed on restricted plan benefits such as out-of-network expenses. As the regulations are refined these issues will be settled.

As the government sorts out all the provisions of the law there will be more specific information on the way the law will be implemented.