What is Exhaustion of Benefits?

Exhaustion of Benefits is the term for a situation in which a party has utilized all the allocated assistance that had been available to them and has no remaining funds. This is seen in cases where insurance policyholders agree to limits on certain coverages, treatments, or claims, and run out of the specified funds.

A major risk to people who exhaust their benefits is that the benefits may not cover all of their existing expenses, so they may need to pay large amounts of money out of pocket. Holders who are reliant on disability benefits or health insurance are particularly vulnerable to this. In some cases, policyholders may be able to appeal to insurance providers for an extension of benefits. They can also seek alternative forms of coverage, though that is not always possible. In addition, it is often not possible for a policyholder to appeal, take legal action, or advance into a different stage of coverage unless the existing funds are already exhausted.

Terms of coverage are important for both the policymaker and policyholder. It is important to observe when coverage is paid out, if there is a limit, and when coverage may run out. Insurers are generally required to notify policyholders as they are approaching exhaustion.