Employers who sponsor medical plans know that those plans can no longer impose lifetime limits on essential health benefits. One exception is for medical plans that cover fewer than two active employees. Retiree medical plans that are separate from the plan for active employees can meet that exception. A recent federal district court decision from California agreed: A retiree medical plan is permitted to impose a lifetime limit on benefits.

Employers wanting to impose lifetime limits under their retiree medical plans should make sure that the plans cover only retirees and are separate from the plans for active employees.