#catastrophic health insurance
Catastrophic health insurance in California
We get many calls from people requesting one thing.
Catastrophic health insurance
They have a very defined requirement and it loosely translates to this.
What is the lowest priced plan I can get?
It’s actually not a bad way to self-insure and we’ll explain the pro’s, con’s, and the biggest impact on catastrophic coverage in years.
The ACA (Affordable Care Act)
The ACA basically offsets the idea of catastrophic coverage
We’ll walk through the best options to keep your costs to lowest amount available.
How can we succeed with catastrophic health coverage?
First, what is catastrophic health coverage?
Catastrophic health insurance is basically designed to cover the big medical bills that can wipe someone out financially.
And boy are there many of those these days.
Over half of bankruptcies are the result of unexpected health care expenses
Many people have heard that stat.
Here’s one they might not have heard.
The majority of those individuals are insured when the health care expenses occurred.
So we need to be careful.
We want to keep your cost to the minimum but actually have coverage when something big does happen.
ACA effect on Catastrophic health plan design
One of the main tenets of the Affordable Care Act was to standardize the benefits.
Every plan has to cover the core 10 Essential Health Benefits.
Most of this already occurred in California but there were some notable additions.
By law, each plan must cover:
- Outpatient care—the kind you get without being admitted to a hospital
- Trips to the emergency room
- Treatment in the hospital for inpatient care
- Care before and after your baby is born
- Mental health and substance use disorder services: This includes behavioral health treatment, counseling, and psychotherapy
- Your prescription drugs
- Services and devices to help you recover if you are injured, or have a disability or chronic condition. This includes physical and occupational therapy, speech-language pathology, psychiatric rehabilitation, and more.
- Your lab tests
- Preventive services including counseling, screenings, and vaccines to keep you healthy and care for managing a chronic disease.
- Pediatric services: This includes dental care and vision care for kids
Furthermore, and this is the bigger impact to the search for catastrophic coverage, the law established certain benchmarks.
These are called Bronze, Silver, Gold, and Platinum.
Plans have to meet these baseline benefit levels +/- 2%.
This means we can’t really have a plan under the Bronze level except for people under 30.
There is a Catastrophic plan level for individuals under age 30
It’s actually very similar in benefit and cost to the Bronze anyway.
So what does this do to the whole notion of catastrophic health coverage?
It limits it.
Basically, the lowest priced plan on the market has around a $5000 deductible with a $6250 max out of pocket.
- We can’t go lower than that
- We can’t carve out benefits like maternity (10 essential health benefits)
- We can’t get generic drug only plans
All those carve outs went away.
So what’s the net take away?
We can basically look to the Bronze plan for catastrophic health coverage.
This is true for both the individual/family market and group health coverage.
There are some important items to first consider.
The tax credit and catastrophic health coverage
There are two kinds of people we come across who are interested in catastrophic coverage.
- Lower income Californians who can’t afford coverage
- High income individuals who want avoid the penalty at the lowest cost
Self-employed people generally make up a lot of this market.
For the lower income individuals who just want to avoid the penalty of not having health insurance, they may qualify for a tax credit.
In this case, the cost of coverage may come down considerably.
Call us at 800-320-6269 to see if your eligible for a tax credit. Here are the income levels.
Here are income levels:
In this case, you may even get richer benefits (the Enhanced Silver 73, 87, and 94 plans) for the same cost.
That’s for lower income Californians. There’s help. Call us.
For higher income people who want to avoid the penalty and can afford bigger bills, we’re basically looking at the Bronze.
A few notes.
If you have health issues, we should really consider the true out of pocket costs.
This is premium and also the Cost Sharing.
Most importantly, the Max out of Pocket.
Max out of pocket is a key criteria to look at when considering catastrophic health coverage as an option.
The Max OOP is basically the amount you can expect to pay up to for very large bills in a calendar year.
One important note: The Bronze, Silver (not enhanced), and Gold plans all have the same Max OOP.
This means that if you get a really large bill, you may face the same exposure anyway.
That definitely makes the lower priced plans more advantageous.
The Platinum has a lower max out of pocket but it’s also quite a bit more expensive.
We can help you compare the plan options at 800-320-6269 to find the best value.
Why get health insurance at all?
This is a common question for many people that do not qualify for a tax credit.
It’s a legitimate question.
We’ll put to the side for now the calls we get daily where someone has a $20K hospital bill and needs insurance.
In 2016, it’s $695/adult (half that for children) or 2.5%, whichever is lower.
Let’s say an individual makes $50K. That’s $1250 annually or just over $100/month.
Okay, let’s say the insurance premium is $300/month (no tax credit).
That means the premium is really $200/month (total premium minus the penalty).
You are going to pay Uncle Sam 1/3 of the cost of the premium anyway!
And get nothing for it.
In fact, you’re really subsidizing other people’s health insurance with your penalty.
Of course, as your income goes up, at some point, it makes no sense to go uninsured.
For example, if you make $100K, your penalty might be $2500. That’s most of the cost of insurance in the case above.
The penalty is the first concern.
2. Financial risk
The underlying reason for catastrophic health coverage is more important now more than ever.
The cost of insurance has spiraled because the cost of the underlying health care has gone parabolic!
New medications are $85K. The new genetic cure for blindness is $1M.
Look at the headlines. You’re not just buying the ability to go get antibiotics.
Healthcare is hitting an ability curve that is unprecedented. You have to have protection for this.
Roughly 50% of bankruptcies are due to unexpected healthcare expenses
50%. Those are bad odds. Blackjack is 49/51% and look at those bright lights in Vegas!
Can’t I Just get health insurance if I get sick or hurt?
You have to enroll during Open Enrollment (generally Nov 1st – Feb 1st of each year) however.
In order to get coverage outside of Open Enrollment, you need to have large life change events (loss of coverage, move to another area, household change, etc).
We have people call in from Feb to Oct with serious health diagnosis and there’s not much we can do for them.
It’s pretty depressing. Don’t be that caller.
Keep in mind that doctors/hospitals will treat you differently if you are uninsured.
Sure, they won’t say that publicly but what’s the first question a doctor or hospital asks?
What insurance do you have?
Don’t think for a second that you’ll have the same options if uninsured.
Even if paying cash.
Yes, you can come on Nov 1st (for a Jan 1 effective date) but keep this in mind.
Most catastrophic health care expenses occur at hospitals. One emergency surgery or ER visit can quickly run 10’s of thousands of dollars
It’s the emergency surgery. The car accident. The ACL tear. The kidney stone.
How to compare Catastrophic health plans