Is catastrophic coverage a good alternative to a more costly bronze policy?

[MichaelB]

One little discussed aspect of ACA is the coverage option for a household that doesn’t qualify for a subsidy but still finds coverage unaffordable. That point is where the lowest cost bronze plan costs more than 8% of income but total household income is above the 400% of FPL. This would be a household of two with $75K income and a bronze policy premium of $600 per month. Consumers in areas with lots of competition may have better options, but many live in less competitive marketplaces and face this reality.

Does catastrophic coverage satisfy this need? It has the same 10 essential health benefits and the same deductible as a bronze policy. It also has the same structure as a high deductible policy (without the HSA benefit) where the insured pays the entire charge up to the deductible, then the plan pays 100% of all subsequent costs.

The differences between the two are not readily apparent or easy to identify, other than the catastrophic plan is not subject to an actuarial value limit. Here’s a US News article comparing the two http://health.usnews.com/health-news/health-insurance/articles/2013/08/28/aca-obamacare-bronze-tier-vs-catastrophic-health-insurance

So, is there something about the catastrophic plan that makes it a less appealing policy? Comparing certificates of coverage for both options would help, but they aren’t readily available. There may be network differences, but the higher value bronze plans already have network restrictions. Catastrophic coverage might be an option not just for young invincibles but also people on lower cost underwritten plans that are subject to cancellation this year or next.

Can anyone share any thoughts, experience, links, or informed sources of information on this? Has anyone contacted an insurer to apply or get more information?

This thread would make a nice addition to the FAQ section, so in the interest of keeping it helpful, let’s keep it on topic.

[joe8012]

I've only seen one catastrophic plan. Using ehealthinsurance.com for zipcode 43123, a 60 yr old couple. The catastrophic plan cost more then the bronze at $1204/mo for 2014. A similar 2013 underwritten plan is $400/mo.

[MooreBonds]

Quote:

Originally Posted by joe8012 I've only seen one catastrophic plan. Using ehealthinsurance.com for zipcode 43123, a 60 yr old couple. The catastrophic plan cost more then the bronze at $1204/mo for 2014. A similar 2013 underwritten plan is $400/mo.

I've noticed you can't necessarily depend on eHealthInsurance.com, just like the gov't site may still be buggy.

On eHealth, for my zipcode (in St. Louis County), the only catastrophic plan listed for next year is from United Healthcare.

But on the healthcare.gov site (main page), the summary listing that has all states listed by county (and listing the premiums for a 27 year old, 50 year old, and family plan) shows that in my county, only Anthem and Coventry are the exchange providers, and only they have catastrophic plans listed (assuming you're "allowed" to buy it).

So apparently the ehealthinsurance.com website doesn't list all of the official exchange plans...or perhaps the listing on the healthcare.gov site isn't correct? I don't know if the United plan listed on eHealth is supposed to be an official exchange plan or "off-the-exchange" plan, or if you get different listings once you log into healthcare.gov compared to what's shown on the main healthcare.gov page.

[MichaelB]

I found all the information I needed by using the healthcare widget (here) to find the names of plans available in my county, then got quotes and plan details directly from the insurer.

Looking at plans from a couple of states, catastrophic coverage is at least $100 less than the lowest cost bronze and the price difference is greater in the less competitive markets. One reason this may be is the insurer model estimates this group will have a larger component of younger people than other plans, so the totally estimated outlay by the issuer is less, so the premium is less, especially when compared with similar coverage from a bronze plan.

This appears to be a good option not only for people in the "ACA sore spot" (unaffordable coverage, not eligible for subsidy). This also might look interesting to folks that currently have underwritten policies and know a higher cost option is unavoidable in their future.

[pb4uski]

This article is relevant to the thread. This is something I am pursuing because if my income is over 400% FPL but high enough that I remain in the 15% bracket I would not get a subsidy but the premium for the lowest cost bronze plan is ~$675/month (over 8% or income). A catastrophic policy premium is ~$425/month so I would save ~$250/month with a catastrophic plan.

With a catastrophic plan the cost would be slightly more than a subsidized plan if my income is just under 400% FPL the catastrophic plan gives me much more flexibility to take 0% LTCG and do Roth conversions at 15%.

According to the insurer's website the minimum (premium only), expected (based on our expected health care use) and max (worst case - significant health event) costs would be ~$3k lower in each case after considering deductibles and co-pays. I would lose the ability to contribute to my HSA with a catastrophic policy but $3k a year seems to me to be a big price to pay to make HSA contributions.

We have had a HSA-HDHP for many years and catastrophic coverage fits us well because we are healthy and our main reasons for wanting insurance is to gain access to negotiated rates for health care services and protect our assets from a costly health event.

[MichaelB]

Quote:

Originally Posted by pb4uski This article is relevant to the thread. This is something I am pursuing because if my income is over 400% FPL but high enough that I remain in the 15% bracket I would not get a subsidy but the premium for the lowest cost bronze plan is ~$675/month (over 8% or income). A catastrophic policy premium is ~$425/month so I would save ~$250/month with a catastrophic plan.

The dreaded sore spot.

Quote:

With a catastrophic plan the cost would be slightly more than a subsidized plan if my income is just under 400% FPL the catastrophic plan gives me much more flexibility to take 0% LTCG and do Roth conversions at 15%. According to the insurer's website the minimum (premium only), expected (based on our expected health care use) and max (worst case - significant health event) costs would be ~$3k lower in each case after considering deductibles and co-pays. I would lose the ability to contribute to my HSA with a catastrophic policy but $3k a year seems to me to be a big price to pay to make HSA contributions.

Seems to me there are two "next steps" One is to contact the exchange and get the process going for the certification that the lowest bronze policy is unaffordable. The other is to call the insurer to explore the catastrophic policy. Some important questions would be what are the network limitations, and are there any specific categories of coverage available in a bronze policy but not the catastrophic.

The policies comparisons I made didn't show differences between the catastrophic and lowest cost bronze policies. The summary of benefits are more difficult to compare, but once again, minimum essential health benefits mean the policies are automatically more comprehensive.

[pb4uski]

Agreed and the first step is complicated by the fact that my state is going its own for its website. So the state website tells me that I need to get the certification to buy a catastrophic policy and refers me to the federal website. When I start the process at the federal website and input my state refers me back to the state website.

However, I am in contact with a person at the exchange who I thing can help me on the way forward.

From the comparison of the policies that I can do off the insurer's website they are pretty similar. I do need to check on provider networks but I suspect that the provider networks are the same since they are from the same insurer and we only have two in the state, but I will followup on that before pulling the trigger.

[MichaelB]

Here's an interesting article that picks up on the idea of using catastrophic coverage ACA

Quote:

It might be attractive for people who are getting kicked off their current plans, can’t afford the new ones and make a bit too much for a subsidy — say, a family of four with a $96,000 income whose “bare bones” health plan used to cost $3,000 and are now being offered more robust coverage with a way more robust price tag.

The article mostly reinforces what we already know, but does add one tidbit to our discussion

Quote:

But the Department of Health and Human Services hasn’t finished the system for applying and certifying those exemptions. It’s probably at least a few more weeks away.

One aspect not yet mentioned is the risk of a bad choice. Annual enrollment means that if we don't like the policy we choose, we can change it once again at the end of the year.

[REWahoo]

Adding to MichaelB's post above, here's an article outlining how someone with a high deductible plan might save money through using a "concierge" medical service.

Quote:

Many of the new health plans have high deductibles that most members will never hit, meaning patients will still be paying thousands of dollars out-of-pocket anyway—possibly even more than what they’d spend on concierge medicine. People with deductibles of $5,000 or more should think about how many times a year they typically see the doctor and for what, keeping in mind that annual checkups are free under the ACA. If doctor visits typically cost $150 and the patient has six appointments a year, a concierge practice offering the same services for $40 or $50 a month might be cheaper.

Note: Ignore the political nature of the article's title, an obvious sensationalism ploy. That really isn't what the article is about.

[MichaelB]

Quote:

Originally Posted by REWahoo Adding to MichaelB's post above, here's an article outlining how someone with a high deductible plan might save money through using a "concierge" medical service. Note: Ignore the political nature of the article's title, an obvious sensationalism ploy. That really isn't what the article is about.

Interesting article. DW does something along those lines. No concierge care, her primary care physician does not accept insurance and does charge a hefty fee. In return, she spends much more time per visit (45 min) the exam is considerable more thorough and covers health and care issues that a typical PCP would routinely refer to a specialist. All tests and specialized care is done within the insurance network, so the only out of network charge is the PCP fee.

I think a good family doctor is worth gold and can deal with most typical health issues we face. It is a real loss in the US that so much care is referred to specialists.

[2B]

This is one of the key issues with the ACA. HI is now "better" by including the "essential services" but also much more expensive. From my perspective what I've seen is that I can get about the same coverage for about the same cost as the now defunct Texas High Risk Pool. Of course, DW will not be able to take advantage of the maternity care or birth control options but our new policy choices include these anyway.

I don't think most people go to the doctor or consume enough medical services to justify the higher costs of anything but the bronze or catastropic policies. Insurance costs seem to go up so quickly that any extra benefit is basically being paid for in "easy monthly payments."

Most of the people on this forum are financially able to pay for their "normal" medical care and only really need something for a major medical issue. I would think a concierge practice would be worth $40 or $50/month for great "normal" care. If the big one hits, I would assume the concierge wouldn't cover the costs for major surgeries or cancer treatments.

[pb4uski]

Quote:

....But the Department of Health and Human Services hasn’t finished the system for applying and certifying those exemptions. It’s probably at least a few more weeks away. ...

That is consistent with the feedback that I am getting from the person at our state exchange that I am in contact with - except the info I received is that the form should be ready "any day now".

I find it interesting that the developers of the system knew (or should have known) that households where the members are over 30 and where the premiums for the lowest bronze plan >8% of income would be eligible to buy catastrophic coverage but they didn't program the system so the catastrophic policies automatically popped up as choices for such situations. It should have been easy to do absent the overall ineptitude of those in charge of developing the system. In most cases they had the information they needed (ages, income and premiums for lowest cost plan).

While the article suggests that premiums between bronze and catastrophic plans are minimal, that is not true in my case/state. The catastrophic plan is 37% lower ($250/month). I suspect this is because premiums on or exchange are not age rated.

[Mod Edit]The main question in my mind is whether the insurers anticipated a significant number of over 30s would be buyers of these plans in pricing them or not. I suspect not.

[pb4uski]

Quote:

Originally Posted by REWahoo Adding to MichaelB's post above, here's an article outlining how someone with a high deductible plan might save money through using a "concierge" medical service. Note: Ignore the political nature of the article's title, an obvious sensationalism ploy. That really isn't what the article is about.

Interesting idea. Not relevant for me and DW since we are healthy and typically just have a couple physicals a year, but for someone had minor, chronic issues I can see it working well.

[Mulligan]

Quote:

Originally Posted by pb4uski Interesting idea. Not relevant for me and DW since we are healthy and typically just have a couple physicals a year, but for someone had minor, chronic issues I can see it working well.

Same here. I checked your link PB, in another thread that showed catastropic rates. At my age of 50 it was a little over $100 monthly difference. When allowing for my HSA tax break, the savings isn't there to justify it when I need insurance at the end of 2014. The link said call the insurance company directly. I wonder if there is a way to get this type of insurance without having the "hardship". If the spread widens for me like it did you making it financially justifiable to go catastrophic, I would not hesitate to buy it and tell them "come and collect your 2% tax from me big boy if you think you can". And no I wouldn't have a tax refund coming.

[pb4uski]

One thing that has crossed my wandering mind is how they will administer this catastrophic coverage thing. I'm not worried about me because as an ER I can manage my income to make sure I stay qualified.

But I can see instances where someone anticipates being in the sore spot and get catastrophic coverage and then loses their job and would qualify for subsidies. Or gets a better paying job and is no longer eligible for catastrophic coverage because the lowest cost bronze plan is now affordable (less than 8% of their higher MAGI). Or changes jobs and now has employer provided coverage.

For those with exchange policies the reconciliation process trued things up for such changes but I wonder how they will true things up for those who qualify for catastrophic policies when they buy them but ultimately don't qualify for catastrophic policies.

My, what a tangled web they weave.....

[sengsational]

Quote:

Originally Posted by pb4uski I find it interesting that the developers of the system knew (or should have known) that households where the members are over 30 and where the premiums for the lowest bronze plan >8% of income would be eligible to buy catastrophic coverage but they didn't program the system so the catastrophic policies automatically popped up as choices for such situations.

I just went into HealthSherpa and it also didn't seem to be coded to show catastropic plans when the lowest bronze policy was more than 8% of income. You could see them if you put in an age of 30 or less, though. ValuePenguin | Insuring Your Decisions With Data will show you the catastropic plans irrespective of the income you put in.

With respect to the healthcare.gov site, I suspect they didn't want it to be "too easy" for older people to end up with a catastropic plan, so they put in the manual step to validate the price of the lowest bronze.

Here is a "catastropic vs bronze" data point for folks:
BCBSNC offers a bronze that's very close to their catastropic plan. The bronze is $1,368/mo and the catastrophic is $993/mo. The OOP on the two plans are the same and deductables are 27% higher on the catastrophic. Both plans allow a copay for the first 3 or 4 visits. So you can save $375/mo (27%) if you take a 27% higher deductable.

For me, though, I don't like the idea of the catastropic plan because:

1. I can't run my medical, dental, and rx expenses through an HSA (tax benefit of maybe $500/yr for me)
2. Don't want to try to navigate the gauntlet of proving that the cheapest bronze plan is more than 8% of my MAGI

[zedd]

Bump. Here we go again.

Quote:

Health and Human Services Secretary Kathleen Sebelius confirmed the changes, which include letting those individuals skirt the law's individual mandate, in a letter to senators. She said she would allow people who got cancellations and could not find affordable new coverage to qualify for a "hardship exemption" in order to avoid a penalty next year for not having insurance.* Further, she announced that those individuals will be able to purchase bare-bones plans that until now were available only for people under 30.*

http://www.foxnews.com/politics/2013...are-exemption/

[pb4uski]

I think it makes choosing catastrophic coverage easier for me. In my case, the networks are the same as a bronze plan, the benefits slightly less but the premiums are 40% lower. Also, it is not HSA eligible (not sure why) so I have to give up contributing to my HSA if I want the 40% savings.

I suspect that this screws the insurance companies in that they would not have anticipated so many over 30 insureds being part of the pool in pricing catastrophic coverage, but whatever...

[zedd]

pb4uski, I'm curious how/where you found catastrophic coverage plans. Did you go to the exchange and fudge your age? Or maybe you contacted the insurer directly?

Odd that the plan you looked at is not HSA-eligible? That complicates things for me as I was counting HSA contributions to lower my OMAGI thus increasing my premium subsidy.

[MichaelB]

A few details.

A letter from a group of Senators to HHS (here) asks if individuals with cancelled policies who have not yet found affordable replacements will be eligible for a hardship exemption, which also makes them eligible for catastrophic coverage. The response is a letter (here) that basically says yes.

This doesn't look like a change in policy. Catastrophic coverage has always been available for individuals over age 30 who qualified for a hardship exemption, as shown by this thread. There may be something else not included in the referenced letters.

It would be most helpful to members if we could keep the discussion focused on implementation.