What is a limited benefit plan?

A limited benefit plan is designed to provide a narrow scope of coverage, often focusing on specific services or types of care rather than offering comprehensive health insurance. These plans typically have lower premiums compared to more comprehensive insurance options, making them attractive to some consumers looking for basic coverage.

Limited benefit plans may cover a set range of medical services, such as certain hospital stays, outpatient visits, or preventive care, but they do not extend to all healthcare needs. This means that they might omit critical services like maternity care, mental health services, or prescription drugs. Such plans are commonly used by individuals who may need a minimal level of protection and can bear the risk of higher out-of-pocket costs for unexpected medical events.

In contrast, plans that offer extensive coverage or are designed to cover only catastrophic events do not fit into the definition of limited benefit plans. Additionally, while there are plans focused specifically on dental and vision care, they do not encompass the broader concept of limited benefit plans applicable to a wider range of health insurance contexts.