Does Low Power Mode affect long-term battery health?

You state two different charging habits, so I will address them separately. Also you didn't state a device, but these principles apply to all other devices that use lithium ion batteries.

Low Power Mode does not have a negative effect on your long-term battery health, and in fact actually works to slow the decline as your battery isn't degrading as fast. But this setting should only be used when your device is low on charge, not all the time. The reason is because it will throttle back the performance of your iPhone, such as the connectivity and refresh rate to preserve battery, and is only meant for a temporary situation until you find a charger.

While the more common habit people will follow of keeping their device's charge between 20-80%, there is a bit of confusion among it. First off, while you aren't letting your battery go to the minimum or maximum, by capping your device at 80%, you have less available battery range during the day. This forces you to charge your phone more frequently, which can ironically degrade the battery faster over time. So while I agree that dropping below 20% is not good for the battery, stopping at 80% is unnecessary. If you set your Charge Limit to 100% and utilize Optimized Battery Charging, your iPhone will already be at 80% most of the night right, and allow the battery to rest by taking charge from the outlet. Also, Charge Limit's aren't great either as they still charge to 100% occasionally, defeating the purpose.

Learn more from my User Tip: Charge Limit or Optimized Battery Chargin… - Apple Community

Our friend, @Zachyy, has provided some good info. And though they have focused on the iPhone, the same principles hold for the MacBook computers.

I'll add this to the thread:

No, keeping low power mode enable all the time has no effect on the long term life of the battery. So go ahead anduUse your device to its full potential.

Here is some of Apple's guidance regarding battery performance, health and management:

Batteries - Maximizing Performance - Apple Support

About battery health management in Mac laptops - Apple Support 

About Optimized Battery Charging and Charge Limit on Mac - Apple Support

In a nutshell, to get the most from your battery:

• Let the OS and charging circuits manage the battery as designed.

• Plug in when using the computer near available power.

• Use on battery when ac is unavailable or when you must be mobile.

• Don’t subject the computer and battery to extreme temperatures.

• Don’t allow the battery to regularly discharge deeply before plugging in. Yes, it may happen from time to time, just don't make it a habit.

• Don’t obsess over battery life and/or health.  

❝Worry is the misuse of imagination.❞ – Zadra

lily_011 wrote:

I usually turn on Low Power Mode on my iPhone 11 when the battery drops to 80% and keep it on until it reaches 20% before charging it again. Is there a better way to maintain the battery health?

There's a reason why your device automatically turns off Low Power Mode when it hits 80%, it isn't meant to be used at such a high percentage, only when your device gets low. Your habit is too difficult to consistently follow. Charging all night, with Optimized Battery Charging is a good habit for battery health and is much more convenient.

Also, is it better for the battery life if I only use my phone for emergencies?

At that point, where you are only using your iPhone for emergencies because of the battery life, and not for convenience or joy, is overkill. Monitoring the battery health that closely is not good. Use it for whatever is convenient to you and don't worry about the battery.