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 for pure insurance.
That being said, there’s a new option to look at that bypasses the ACA requirements and avoids the tax penalty.
We’ll walk through the best options to keep your costs to lowest amount available.
Let’s get started.
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.
Good news and bad news.
We’ll start with the Good.
Health Sharing Plans For Catastrophic Health Care
We have a new addition to the catastrophic health offering.
Health Sharing plans…principally AlieraCare.
AlieraCare is NOT insurance.
These are memberships where members share health care costs.
Here’s the deal…
If you don’t qualify for a tax credit
You’re in good health or only want catastrophic coverage
AlieraCare becomes an option we need to consider.
You can quote AlieraCare here and even enroll here.
The main reason people investigate AlieraCare is that they can avoid the tax penalty and the costs are generally 1/2 the cost of the Bronze plan (with no subsidy).
You have to weigh this against the trade-offs of health sharing plans described in the article above.
AlieraCare has a catastrophic version of the health sharing plan which is very popular right now.
Get rates and learn how the catastrophic plan work at CarePlus Advantage health sharing plans.
Let’s look at the ACA take on catastrophic coverage.
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 or run your instant quote here. Our services are free.
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 at 800-320-6269.
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. You can also quote the catastrophic plans here.
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.
There are two considerations to look at.
The first is the fact that we now have a penalty for not having health insurance.
You can find more penalty detail here but here’s the broad stroke:
In 2017, it’s $695/adult (half that for children) or 2.5%, whichever is lower.
The 2.5% usually wins out in California and especially if you make too much for a tax credit.
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.
Find out how Trump might affect the ACA penalties and plans.
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!
At least get the catastrophic level of coverage.
Can I Just Get Health Insurance If I Get Sick Or Hurt?
The new plans are guaranteed issue, right? We can just get the plan anytime.
The plans are guaranteed issue which means people cannot be declined due to health.
You have to enroll during Open Enrollment (generally Nov 1st – Jan 31st 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).
More info on the Special Enrollment here.
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
That’s really the risk of not being insured.
It’s the emergency surgery. The car accident. The ACL tear. The kidney stone.
On and on and on.
We’re all healthy.
Until we’re not.
Just to be clear, we’re not saying these things out of self-interest.
We get the calls. The bad calls. The $50K bill calls.
And there’s nothing we can do for them in most cases.
How To Compare Catastrophic Health Plans
Call us at 800-320-6269 and we can provide all the catastrophic plan options. You can also quote both Bronze level plans and Short Term here.
We’ll also make sure you’re getting a tax credit if eligible.
If not, we’ll find the lowest priced plan that protects you from the “big what if”.