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

[Malcolm2]

Here is a good analysis by Time.

Obamacare: Mandate Delay Is The Biggest Change Yet | TIME.com

Looks like a 'hardship' can be just about anything if you have been cancelled.

 

[ERhoosier]

I wish they would expand the "hardship exemption" to include people who face getting pummeled with 3X premium increase like me and allow us to purchase this as a permanent option!

Agreed. I've never understood why "catastrophic coverage" Plans should not be an option for all. Functionally they are not far off low-end Bronze in benefits, particularly if HSA eligible, and the bureaucracy associated with tracking, processing, & enforcing hardship exemptions costs $$$$ that could be better spent elsewhere (e.g. increasing co-pay subsidy for lower income folks).

 

[Mulligan]

Agreed. I've never understood why "catastrophic coverage" Plans should not be an option for all. Functionally they are not far off low-end Bronze in benefits, particularly if HSA eligible, and the bureaucracy associated with tracking, processing, & enforcing hardship exemptions costs $$$$ that could be better spent elsewhere (e.g. increasing co-pay subsidy for lower income folks).

If they would just be honest and admit it, I wouldn't be nearly as perturbed over it. Instead of them saying in essence "we know what is best for you and saving yourself from these worthless policy's". I wish they would stand up and say "we don't want you healthy people to try and save a buck on your premium because we want your money to spend on the other peoples claims". The contradiction is befuddling to me.. They constantly parroted how high deductible plans are worthless, then they turn around and award them to young people and anyone who got cancelled.

 

[pb4uski]

For those over 30 looking to apply for and exemption certificate so you can buy catastrophic coverage I just received a link to the "Application for Exemption from the Shared Responsibility Payment for Individuals who are Unable to afford Coverage and are in Certain States with a State Based Marketplace"

http://marketplace.cms.gov/getoffic...-and-articles/affordability-sbm-exemption.pdf

 

[MooreBonds]

If they would just be honest and admit it, I wouldn't be nearly as perturbed over it. Instead of them saying in essence "we know what is best for you and saving yourself from these worthless policy's". I wish they would stand up and say "we don't want you healthy people to try and save a buck on your premium because we want your money to spend on the other peoples claims". The contradiction is befuddling to me.. They constantly parroted how high deductible plans are worthless, then they turn around and award them to young people and anyone who got cancelled.

The reason is that no one wants to say "we want ______ (insert group of people) to pay more for _______ (insert beneficiary group of people)'s benefit", because it sounds too much like a negative statement that can be thrown back in their face at election time. No one wants to have to defend arguing for someone to have to pay more.

Rather, by trying to argue that "this healthplan is inferior", it indirectly gives them a reason for wanting to abolish the plan, as though they are somehow looking out for and saving you, and making you better off (even though it involves you paying substantially more money). It's more palatable to voters to live in lala land where no one has to pay more for anything, and everyone is better off and gets something in return.

If they made EVERYONE buy a minimum of a Bronze plan, then the 20-somethings would have to pay even more for coverage than the catastrophic plans (even though the catastrophic plans are worse than many older High Deductible plans that they call "inferior!). By at least offering the under-30 crowd and those who have truly huge insurance costs a catastrophic plan with the lowest possible premiums, they can avoid the 'worst' of the black eye in trying to defend the healthcare plan with minimum premiums that are even more than the catastrophic.

 

[rbmrtn]

Can't say. The exchange of letters doesn't give details, neither do any of the media reports. I've looked for the HHS bulletin, which I'm sure has the detail we want, but haven't seen it yet. It may become available over the weekend. If so, someone will surely posr details here.

Here's the bulletin, http://www.cms.gov/CCIIO/Resources/.../cancellation-consumer-options-12-19-2013.pdf

Not sure if this really something new or just clarification as there has always been a hardship for unaffordability. And if you qualify for subsidy a bronze plan may be cheaper, catastrophic plan may not be available ( none in my area ).

Here's a USnews article comparing bronze/catastrophic, ACA Bronze Tier Health Insurance vs. Catastrophic Plans - US News and World Report

 

[ERhoosier]

Here's a USnews article comparing bronze/catastrophic, ACA Bronze Tier Health Insurance vs. Catastrophic Plans - US News and World Report

Nice, concise table. "Catastrophic" Plans are not eligible for subsidy, which is huge for those eligible but non-issue for others. The limit to 3 primary care visits for gov't-defined "preventative services" seems almost meaningless since one (maybe 2) visits suffice for almost all folks. The deductibles & OOP max ($6,350/12,700) are same.

 

[MichaelB]

Here's the bulletin, http://www.cms.gov/CCIIO/Resources/.../cancellation-consumer-options-12-19-2013.pdf

Not sure if this really something new or just clarification as there has always been a hardship for unaffordability. And if you qualify for subsidy a bronze plan may be cheaper, catastrophic plan may not be available ( none in my area ).

Here's a USnews article comparing bronze/catastrophic, ACA Bronze Tier Health Insurance vs. Catastrophic Plans - US News and World Report

Thanks! This is new, but still doesn't look like a change in policy.

If you believe that the plan options available in the Marketplace in your area are more expensive than your cancelled health insurance policy, you will be eligible for catastrophic coverage if it is available in your area.

if your policy is cancelled you don't need to meet the actual hardship test.

This looks much more like a one time exception. Makes sense, given how hard it has been for some to get hard quotes and policy info. It'll go away when the enrollment process and system is working more smoothly.

There is way too much complexity in our healthcare provider and insurance marketplace, it leads to difficult or poor choices. A catastrophic option for all could be in interesting option, but to work healthcare providers need to have "cash prices" at or below "insurance prices". As it works now not having access to in network prices is too much of a risk.

 

[pb4uski]

Nice, concise table. "Catastrophic" Plans are not eligible for subsidy, which is huge for those eligible but non-issue for others. The limit to 3 primary care visits for gov't-defined "preventative services" seems almost meaningless since one (maybe 2) visits suffice for almost all folks. The deductibles & OOP max ($6,350/12,700) are same.

For us, there isn't much difference between the HDHI plan we currently have and a bronze plan and a catastrophic plan since we are not eligible for subsidy. Carrier and networks are identical.

HDHI/Bronze/Catastrophic

Individual Deductible $5,950/$5,000/$6,350
Family Deductible $11,900/$10,000/$12,700
Individual MOOP $5,950/$6,250/$6,350
Family MOOP $11,900/$12,500/$12,700
Annual premium $7,548/$8,187/$5,128
"Expected" cost $7,848/$8,487/$5,128
Max cost $19,448/$20,687/$17,828

Since we're pretty healthy the catastrophic plan will save us $3,059 a year in premiums and the benefits are similar. What we give up is being able to make HSA contributions but for us HSA contributions are just shuffling money from taxable funds to tax-free funds and the premium savings exceed the that benefit IME.

 

[ERhoosier]

Interesting that pb4uski shows sl lower OOPmax for Bronze vs catastrophic. In my area, those OOPmax's are the same.

 

[M Paquette]

A catastrophic option for all could be in interesting option, but to work healthcare providers need to have "cash prices" at or below "insurance prices". As it works now not having access to in network prices is too much of a risk.

It's the wealthy sheikh problem.

"You don’t really want to change your charges if you have a Saudi sheikh come in with a suitcase full of cash who’s going to pay full charges.”

- Dr. Warren Browner, CEO, California Pacific Medical Center, a Sutter Health Company

If you charge everyone the insurance negotiated rates, you can't do the "your money or your life" thing when a really wealthy sickie falls into your lap. Cash prices need to remain high relative to the insurance negotiated rate to maximize efficiency.

 

[AllDone]

It's the wealthy sheikh problem.


If you charge everyone the insurance negotiated rates, you can't do the "your money or your life" thing when a really wealthy sickie falls into your lap. Cash prices need to remain high relative to the insurance negotiated rate to maximize efficiency.

Hospital rack rates are ridiculously high, but no one -- other than the occasional sheikh -- pays them. The hospitals typically discount what they charge the uninsured and write off the difference as "charity care" against taxes or to maintain their "non-profit" status. Pharmaceutical samples and patient assistance programs are also allowed to declare retail prices against their tax liabilities even though few people actually pay those prices.

Negotiated prices for drugs are aproximately 10 cents on the dollar compared to the retail list price paid by the uninsured. There are ways to get around the insanely high drug pricing without insurance, but it takes a lot of work.

The system is broken and the ACA is only a baby step in the right direction.

 

[NW-Bound]

Looks like it all comes back to the fact that healthcare reform should be aimed more at the hospitals rather than the insurance companies. The new law already limits how much profit insurers can make, and some people have not stopped beating them up.

I have had a high-deductible ($10K/yr) plan with my insurer, and for 6 or 7 years did not get any coverage from them nor were we expecting any, because we were healthy. Then, just this year and the last, they have paid out more than $120K for my son's and my serious illnesses that required hospitalization and surgeries. We were not declined any services that my doctors and specialists said we needed.

PS. The rack rate would have been perhaps close to $300K!

PPS. The law requires insurers to rebate any profit that exceeds the legal limit. A few months ago, I got a check for $43. That shows my insurer has not been gouging its clients.

 

[samclem]

This looks much more like a one time exception. Makes sense, given how hard it has been for some to get hard quotes and policy info. It'll go away when the enrollment process and system is working more smoothly.

I believe HHS has said it will be good for one year. Many people believe the exemption will also be extended from only those who lost coverage to anyone without coverage. There's no tenable way for HHS or anyone else to argue that an individual who lost coverage and cannot find an "affordable" policy is somehow at greater hardship than someone who never had insurance and is in the same situation. If the individual mandate erodes, we will face the problems of adverse selection and concomitant higher required rates. Or maybe everything will work out great.

 

[mpeirce]

Any idea why the "catastrophic" plans aren't HSA eligible?

 

[NW-Bound]

The high-deductible pre-ACA policy we have had for 6-7 years is an HSA plan. The premium is currently $533 for two of us, both of age 57. It pays nothing until the $10K deductible limit is met, then it pays 100%. There's no copay or anything like that, and that keeps it simple.

I am surprised to learn that one needs "permission" to buy the same now!

 

[Malcolm2]

The reason is that no one wants to say "we want ______ (insert group of people) to pay more for _______ (insert beneficiary group of people)'s benefit", because it sounds too much like a negative statement that can be thrown back in their face at election time. No one wants to have to defend arguing for someone to have to pay more.

Rather, by trying to argue that "this healthplan is inferior", it indirectly gives them a reason for wanting to abolish the plan, as though they are somehow looking out for and saving you, and making you better off (even though it involves you paying substantially more money). It's more palatable to voters to live in lala land where no one has to pay more for anything, and everyone is better off and gets something in return.
.

+1
Of course this is true. The truth should be told, otherwise is is deception plain and simple. These constant changes in this law, I think 12 at last count, are likely to be found unconstitutional. I think they are unprecedented.
Not only that but it is chaos for the insurance companies which is not creating a better system for any of us.

If my policy is not extended , that will be enough of a hardship for an exception. Clearly a huge policy change.

 

[pb4uski]

I prepared our application for an exemption today so we can buy a catastrophic policy. All set to mail.

But now I'm having second thoughts. While the cat policy will save us ~$3,000 a year in premiums, it will also preclude us from doing HSA contributions.

At first, I didn't think the loss of HSA contributions would be a big deal since it is just transferring money from a taxable pocket to a tax-free pocket. But I now realize that in addition to allowing us to transfer funds between taxable accounts and tax-free accounts the deduction also allows us to make additional Roth conversions equal to the HSA contributions $8,450 a year inflated for the next 7 years) and those additional Roth conversions help to keep us out of the 25% bracket once RMDs and SS start at age 70.

My model (which is getting near to being unwieldy) indicates my age 100 NW is ~5% higher by buying a bronze plan, making max HSA contributions and getting the benefit of additional Roth conversions compared to buying the catastrophic plan, saving on premiums but foregoing the HSA contributions and higher Roth conversions.

So I'm leaning to the bronze plan now but may mail the app tomorrow anyway to keep my options open. Any thoughts? (I concede that I may be overthinking this and in analysis paralysis, but it was a slow day today ).

 

[MichaelB]

My model (which is getting near to being unwieldy) indicates my age 100 NW is ~5% higher by buying a bronze plan, making max HSA contributions and getting the benefit of additional Roth conversions compared to buying the catastrophic plan, saving on premiums but foregoing the HSA contributions and higher Roth conversions.

So I'm leaning to the bronze plan now but may mail the app tomorrow anyway to keep my options open. Any thoughts? (I concede that I may be overthinking this and in analysis paralysis, but it was a slow day today ).

Slow indeed. Does your model tell you how likely it is that you'll even make it to age 100?

If you are going to compare Catastrophic vs Bronze you have to assume there are healthcare expenses which are reimbursed differently. Seems to me that is a critical factor in the decision.

May be a bit late for the mail. I'd use online if at all possible, especially if you choose a plain bronze plan.

 

[pb4uski]

Interesting thought. I'm ahead by small amount with the cat plan until I'm 85, at which point the bronze plan with HSA pulls ahead - the power of tax-free compounding I suppose. Dad lived to 75, Mom is 83 and still going strong despite some bad habits and maternal Gram lived to 98 - so who knows.

In our case the benefit difference between cat and bronze are slight. From my post # 34:

For us, there isn't much difference between the HDHI plan we currently have and a bronze plan and a catastrophic plan since we are not eligible for subsidy. Carrier and networks are identical.

HDHI/Bronze/Catastrophic

Individual Deductible $5,950/$5,000/$6,350
Family Deductible $11,900/$10,000/$12,700
Individual MOOP $5,950/$6,250/$6,350
Family MOOP $11,900/$12,500/$12,700
Annual premium $7,548/$8,187/$5,128
"Expected" cost $7,848/$8,487/$5,128
Max cost $19,448/$20,687/$17,828

Mail will work ok as our state has extended existing 2013 coverages to 3/31/2014 since the system was so screwed up.

 

[pb4uski]

UPDATE - Well, it has been a long odyssey, but I heard today that our bronze plan was converted to a catastrophic plan as of July 1.

We were qualified to buy a cat plan even though we were over 30 because our 2013 plan was cancelled (and also because the bronze level premium would be over 8% of our 2014 projected O-MAGI).

Our state exchange kept insisting that we needed an exemption certificate before we could purchase catastrophic coverage, I believe in part because the feds were telling them that was required. However, other states, notably NY, have a process where one could buy a catastrophic "presumptively" and simultaneously apply for an exemption - you just had to provide a cancellation letter. However, the rub was that the feds were not processing exemptions applications, even thought they issued an application form back in December. This stalemate held things up until just now.

I patiently tried to work things out through the state exchange, but finally gave up and got my state rep, the Governor's office, and our U.S. Senator's office involved. I have no idea what worked, only that my policy was converted effective July 1. I didn't get an exemption certificate so perhaps they got tired of my incessant complaining. Funny, I had pretty much given up on the whole idea for this year and then it actually happened.

Deductibles would have carried over (same carrier) but we haven't had any medical costs so far this year so it is a moot issue.

Bad part is that we will only be eligible for half of our normal contribution for our HSA since we will have had HSA-eligible coverage for only a half-year. Good news is we'll save over $1,500 in premiums the rest of the year.

Coverage is similar. Deductible is $2,700 higher but max OOP is only $200 higher. Will reassess when open enrollment re-opens in the fall.

 

[Mulligan]

Congrats for being vigilant PB. When the dust settles on what my premium will be if I get cancelled this fall, I may go your route. I will have to wait on the final tally on premium cost differential between the two. As of now I get back about $1000 in taxes through my HSA. This will have to be thrown into the computations to decide if I should go that way.


Sent from my iPad using Tapatalk

 

[Lancelot]

The high-deductible pre-ACA policy we have had for 6-7 years is an HSA plan. The premium is currently $533 for two of us, both of age 57. It pays nothing until the $10K deductible limit is met, then it pays 100%. There's no copay or anything like that, and that keeps it simple.

I am surprised to learn that one needs "permission" to buy the same now!

Procedures almost never seem to become more simple, do they?

 

[pb4uski]

The high-deductible pre-ACA policy we have had for 6-7 years is an HSA plan. The premium is currently $533 for two of us, both of age 57. It pays nothing until the $10K deductible limit is met, then it pays 100%. There's no copay or anything like that, and that keeps it simple.

I am surprised to learn that one needs "permission" to buy the same now!

+1. An unfortunate consequence of the government "protecting" us and accommodating the lowest common denominator.

 

[sengsational]

Too Early To Start On >8% Hardship?

Last year it appeared that the process for getting catastrophic coverage was more than a little haphazard. I wondered if it's been cleaned-up now, if there are any reports of getting a hardship letter without a lot of fuss.

The whole catastrophic option last year seemed in too much in flux, so I ignored it completely. So I hope these are not 'dumb questions'! For my family of 3, the non-subsidy price of the least expensive bronze plan is $11,134/yr. Does that mean that the 3 of us would simply have to earn less than $139K? THAT shouldn't be too hard! I must be missing something.

Is the first step to fill-out the fed's form, selecting #14? What documentation is required? Do I need to wait until open enrollment to start?