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Catastrophic Health Insurance Florida

Catastrophic Health Insurance: Pros and Cons

Amid rising health insurance costs and a tough economy, a growing number of consumers and employers are turning to high-deductible health plans (HDHPs), often known as “catastrophic health insurance.”

These plans feature lower-than-average premiums in exchange for higher-than-average deductibles, and many on the market today are paired with tax-advantaged health savings accounts (HSAs).

Under a high-deductible health plan, you pay for all your medical expenses – except for qualified preventive care – up to the annual deductible. After that, some plans pay 100 percent of your covered medical expenses. Others initially pay a share of your medical bills – such as 80 percent – before paying 100 percent when you reach an out-of-pocket maximum.

Your premiums do not count toward your deductible or your out-of-pocket maximum.

These plans are sometimes referred to as catastrophic health insurance plans, but the name is a bit of a misnomer. Under health care reform, the plans must cover 100 percent of preventive care, even before you pay the deductible.

In addition, many of the plans cover a full range of health care services – not just hospital and emergency medical costs you might associate with catastrophic care.

The HSA health insurance option

HSA-qualified, high-deductible health plans are a popular option. Made possible by a federal law that went into effect in 2004, these plans are coupled with a health savings account that lets you set aside pre-tax money to use for medical care today or in retirement.

“More and more consumers are looking for ways to save money on health care and on taxes, so they’re taking another look at HSAs,” says Ellen Laden, a spokeswoman for Golden Rule Insurance Co., which underwrites individual health insurance plans for UnitedHealthcare.

Golden Rule pioneered the first medical savings account in 1993, a forerunner to the HSA.

Consumers shopping for affordable individual health insurance were the first to gravitate toward HSA-eligible plans, followed by small employers. Mid-size employers have also embraced HSA plans.

“Many small and mid-size employers use HSA-type plans as a cost-saving measure, and many employees, especially those that are seeking more “catastrophic” type coverage and don’t have any major health concerns, see them as a way to save money on premiums and still cap their exposure in the event something happens,” explains Cory Friedman, Vice President with GCG Financial.

While some large employers use HDHPs, many of the biggest employers self-insure. “All size employers use HDHP plans in some regard, but many larger employers are able to control costs by moving to self-insured plans without necessarily needing to increase deductible exposure to employees,” says Friedman

Data shows that the popularity of HDHP and HSAs continues to grow. According to the America’s Health Insurance Plans (AHIP) 2016 survey, 20.2 million people were enrolled in a HDHP/HSA plans either through their employer or individually in 2015.

Data from the Centers for Disease Control and Prevention (CDC) concurs, finding that the percentage of privately insured adults with HDHP plans aged 18 to 64 has risen from 26.3 percent in 2011 to a whopping 39.3 percent in 2016 which is an increase of almost 50 percent.

How these health insurance plans work

Not all high-deductible health plans can be paired with an HSA. In order to qualify for HDHP status in 2018, the plan must have a deductible of at least $1,350 for an individual and $2,700 for a family. Out-of-pocket maximums can be no more than $6,650 for an individual and $13,300 for a family.

You can contribute up to $3,450 per year in pre-tax dollars to an HSA as an individual or up to $6,900 as a family. You can save an additional $1,000 in the account if you’re 55 or older.

The money in the account grows tax-free, and in some cases companies that service the accounts provide investment options, such as mutual funds to promote further savings growth, Laden says.

When you withdraw the funds, you do not have to pay taxes so long as the withdrawals you take are for qualified medical expenses, such as the HDHP’s deductible or medical costs not covered under the plan, including dental and vision care. You can also use the accounts to save for long-term care not covered by Medicare.

Laden says she knew one man who poured as much as he could into his HSA to pay for orthodontic bills he knew he’d eventually face for his children.

“All three little girls were thumbsuckers, and he knew they’d need braces,” she says.

HSA funds can also be used for non-medical expenses, but you’ll pay a 20 percent tax penalty on top of income taxes on any money you withdraw for non-medical expenses before age 65, Laden says. You pay only ordinary income tax – no penalty – on withdrawals for non-medical expenses after age 65.

An HSA account is portable. Even if you switch to a different type of health plan or change employers, the money is still yours to spend on health care.

Is a high-deductible health plan right for you?

Most types of consumers can benefit from high-deductible health plans but there are two types of consumers that will often benefit the most from a HDHP.

The young and healthy are prime customers. “HDHP plans typically cost less, so why pay more in premiums for a richer benefit plan that you don’t expect to use,” advises Friedman. “They would be better off taking some of the premium savings and funding an HSA, so that they have some money set aside in the event they incur unforeseen medical costs,” he continues.

On the other hand, if you know you will hit your maximum out of pocket, an HDHP is a great option. “All things being equal, if your out-of-pocket is the same on an HDHP as it is on a traditional PPO, you get to pay a portion with tax-free dollars assuming your HDHP plan is HSA-eligible, which means your healthcare dollars go further,” points out Friedman.

Remember, though, that not all high-deductible plans are HSA-qualified. In addition, HDHPs vary in what they cover and how they’re priced.

Consider the following, Laden says:

  • How much can you afford to pay for health insurance?
  • What coverage do you need?
  • What does the plan cover, and what does the plan not cover?
  • How much is the deductible, and how much, if any, would you pay in coinsurance up to the out-of-pocket maximum?
  • How will you save for the HSA? Many plans require members to contribute a certain amount each month to the HSA, $25 a month is a common amount.
  • Does the plan offer a strong network of providers, and is the network national?

If you sift through health insurance quotes and consider a “catastrophic health insurance plan,” make sure you understand how the plan works, what it covers and how much you might end up paying out of pocket.

Catastrophic health plans: Not for everyone

Last Updated: July 31st, 2014

By Barbara Marquand , Insure.com

Today’s catastrophic health plans are not the stripped-down plans that budget-minded consumers bought in previous years.

The old versions, also known as major medical plans, featured relatively low premiums and high deductibles and were designed as safety nets in case you got really sick or suffered a terrible injury. Because the plans generally didn’t pay for anything until your medical expenses reached the deductible — some as high as $10,000 — you paid out of pocket for all your basic care, like doctors visits, routine lab tests and minor procedures.

Now under the Affordable Care Act, catastrophic plans offer broader coverage and are limited in how much they can make you pay out of pocket. They also are available only to certain consumers, and even for those eligible to buy them, may not be the most affordable option.

Who can buy a catastrophic health plan

Most Americans are required to have health insurance or pay a tax penalty. Health plans that count as sufficient coverage to meet that requirement are standardized into five categories, according to the portion of health care costs they pay for the average person. Those plans are:

  • Platinum: The health plan pays about 90 percent of your health care costs. You pay 10 percent for medical care out of pocket.
  • Gold: Health plan pays 80 percent; you pay 20 percent.
  • Silver: Health plan pays 70 percent; you pay 30 percent.
  • Bronze: Health plan pays 60 percent you pay 40 percent.
  • Catastrophic: Health plan pays less than 60 percent. You pay more than 40 percent.

You can’t buy a catastrophic plan unless you’re under age 30 or you have what’s known as a “hardship exemption,” which exempts you from paying the tax penalty if you don’t have coverage. There are 14 kinds of hardship exemptions based on income and other factors.

Today’s catastrophic plans generally have higher deductibles and on average pay a smaller percentage of your health care costs than the metal plans on the market. But they include more protection than the catastrophic plans of yesteryear.

Now catastrophic plans must cover:

  • All the essential benefits, including pregnancy and maternity care, that the traditional plans cover after you meet the deductible.
  • Three primary-care visits a year at no cost to you. So even if you haven’t met the deductible you don’t have to pay for those three visits.
  • Preventive services at no cost to you. Those services include a variety of health screenings and immunizations.

And like the metal plans, catastrophic plans can’t put an annual or lifetime dollar limit on the benefits you receive, and they must cap the amount you pay out of pocket for health care. The cap for 2014 health plans is $6,350.

No tax break

Theoretically, catastrophic health plans should have lower premiums than the other plans because of their high deductibles. But catastrophic plans are not eligible for tax credits to lower the premium, so you could end up paying a lot more for a catastrophic plan than for one of the metal plans with a subsidy. And even without a subsidy, some bronze plans have lower premiums than some catastrophic plans.

When you buy a platinum, gold, silver or bronze plan in the health insurance marketplace, you qualify for a premium discount if your annual household income falls under 400 percent of the federal poverty level. (For 2014 health plans the 400 percent threshold is $45,960 for a single person.) You qualify for reduced out-of-pocket costs if your income falls below 250 percent of the federal poverty level ($28,725 for a single person for 2014 plans).

Check whether you qualify for a subsidy for one of the metal plans before settling for a catastrophic plan, and dig into the details about coverage before buying. Check the plan’s provider network — are the doctors and hospitals you want to use included?

If you’re under 30 or have a hardship exemption, you can buy a catastrophic health plan during open enrollment from the health insurance marketplace, directly from an insurer, through a health insurance broker or from an insurance website selling plans from different carriers.

Open enrollment for 2015 plans is Nov. 15, 2014, to Feb. 15, 2015.

Blue Cross Blue Shield of Florida Catastrophic Plans

Catastrophic Blue Cross Blue Shield of Florida plans enable consumers to pay for the coverage they need instead of covering what might happen. Most people select insurance based on how low the deductible it. They think they are getting a good deal if they do not have to pay a higher deductible. However, many people, if they checked, would find they are paying more in premiums each year than the amount of the deductible. If you are in good health, this may not make good economic sense. Many people only visit the doctor once or twice a year. Most of them do not take high cost prescription medications on regular basis. Why pay for more insurance than you actually need?

These plans help you keep your healthcare costs in check. Blue Cross Blue Shield of Florida Catastrophic Plans offer consumers coverage in case of unexpected hospitalization or emergency care. That gives people coverage in case of an unexpected illness or accident. This type of coverage makes sense if you or your end in good health. It will keep the costs of medical care under control while keeping your monthly premium payments down. You will find that the cost of these plans is usually lower than plans that include preventative health care.

To find out is one of the Blue Cross Blue Shield of Florida Catastrophic Plans is right for you, contact a licensed broker to get more information. They can give you a quote on the current rates based on your age, gender, residence location, and health condition. The company base rates on everyone under the insurance policy. You can get the most up-to-date information with a single quote request or making a quick phone call.

Many people choose to sign up for one of the Blue Cross Blue Shield of Florida Catastrophic Plans in conjunction with setting off a health savings account at the same time. Catastrophic plans usually come with a lower monthly premium. Many people choose to take the amount they save each month on premiums and put it into a health savings account. It gives them money available to cover deductibles, coinsurance, and copayments. It is a great way to cover out-of-pocket expenses throughout the year. It is also a good way to cover the cost of procedures not covered by health care insurance. Take some time and get an idea of whether one of these plans is a right fit for you.

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Some policies may have exclusions and limitations. For costs and complete details of coverage, call or write the insurance agent. The amount of benefits and premium will vary depending upon the plan selected.

Catastrophic health plans: Not for everyone

Last Updated: July 31st, 2014

By Barbara Marquand , Insure.com

Today’s catastrophic health plans are not the stripped-down plans that budget-minded consumers bought in previous years.

The old versions, also known as major medical plans, featured relatively low premiums and high deductibles and were designed as safety nets in case you got really sick or suffered a terrible injury. Because the plans generally didn’t pay for anything until your medical expenses reached the deductible — some as high as $10,000 — you paid out of pocket for all your basic care, like doctors visits, routine lab tests and minor procedures.

Now under the Affordable Care Act, catastrophic plans offer broader coverage and are limited in how much they can make you pay out of pocket. They also are available only to certain consumers, and even for those eligible to buy them, may not be the most affordable option.

Who can buy a catastrophic health plan

Most Americans are required to have health insurance or pay a tax penalty. Health plans that count as sufficient coverage to meet that requirement are standardized into five categories, according to the portion of health care costs they pay for the average person. Those plans are:

  • Platinum: The health plan pays about 90 percent of your health care costs. You pay 10 percent for medical care out of pocket.
  • Gold: Health plan pays 80 percent; you pay 20 percent.
  • Silver: Health plan pays 70 percent; you pay 30 percent.
  • Bronze: Health plan pays 60 percent you pay 40 percent.
  • Catastrophic: Health plan pays less than 60 percent. You pay more than 40 percent.

You can’t buy a catastrophic plan unless you’re under age 30 or you have what’s known as a “hardship exemption,” which exempts you from paying the tax penalty if you don’t have coverage. There are 14 kinds of hardship exemptions based on income and other factors.

Today’s catastrophic plans generally have higher deductibles and on average pay a smaller percentage of your health care costs than the metal plans on the market. But they include more protection than the catastrophic plans of yesteryear.

Now catastrophic plans must cover:

  • All the essential benefits, including pregnancy and maternity care, that the traditional plans cover after you meet the deductible.
  • Three primary-care visits a year at no cost to you. So even if you haven’t met the deductible you don’t have to pay for those three visits.
  • Preventive services at no cost to you. Those services include a variety of health screenings and immunizations.

And like the metal plans, catastrophic plans can’t put an annual or lifetime dollar limit on the benefits you receive, and they must cap the amount you pay out of pocket for health care. The cap for 2014 health plans is $6,350.

No tax break

Theoretically, catastrophic health plans should have lower premiums than the other plans because of their high deductibles. But catastrophic plans are not eligible for tax credits to lower the premium, so you could end up paying a lot more for a catastrophic plan than for one of the metal plans with a subsidy. And even without a subsidy, some bronze plans have lower premiums than some catastrophic plans.

When you buy a platinum, gold, silver or bronze plan in the health insurance marketplace, you qualify for a premium discount if your annual household income falls under 400 percent of the federal poverty level. (For 2014 health plans the 400 percent threshold is $45,960 for a single person.) You qualify for reduced out-of-pocket costs if your income falls below 250 percent of the federal poverty level ($28,725 for a single person for 2014 plans).

Check whether you qualify for a subsidy for one of the metal plans before settling for a catastrophic plan, and dig into the details about coverage before buying. Check the plan’s provider network — are the doctors and hospitals you want to use included?

If you’re under 30 or have a hardship exemption, you can buy a catastrophic health plan during open enrollment from the health insurance marketplace, directly from an insurer, through a health insurance broker or from an insurance website selling plans from different carriers.

Open enrollment for 2015 plans is Nov. 15, 2014, to Feb. 15, 2015.

What is the ACA’s catastrophic plan and who is eligible?

  • Louise Norris
  • Individual health insurance and health reform authority; broker
  • April 29, 2018

Q. I’ve always had a high deductible plan, and I’m happy with my coverage. I’ve heard that the ACA allows for a catastrophic plan. Is that the best option for me?

A. Although the term “catastrophic plan” has long been used as a generic catch-all phrase to describe health plans with high deductibles and little coverage for routine care, the ACA assigned strict parameters to the term: Catastrophic plans have limited eligibility guidelines, cannot be purchased with premium subsidies, and must provide certain limited benefits to enrollees before the deductible is met. [Details are available in the text of the ACA, section 1303(e).]

And for the purposes of the ACA’s risk adjustment program, catastrophic plans are in a separate risk pool from the metal-level plans, although they’re in the same general shared risk pool. This means that within a state, catastrophic plans transfer risk adjustment funds with other catastrophic plans, but not with metal-level plans. This is the primary mechanism by which catastrophic plans have lower prices than bronze plans.

Only certain populations can purchase catastrophic plans

Catastrophic plans are only available to people under age 30, or people 30 and older who qualify for a hardship exemption (which means that due to economic hardship —or certain other hardships, like the death of a family member — the person would not be required pay a penalty for failing to maintain health insurance coverage). Regardless of age or income, catastrophic plans used to be available for people whose health insurance policies were canceled because they were not ACA compliant, but that exemption ceased to be available after the end of 2016.

Although the ACA’s individual mandate penalty will be eliminated after the end of 2018, the mandate itself will continue to exist — there just won’t be a penalty for noncompliance. So people will still be able to seek hardship exemptions from the mandate in order to gain access to catastrophic plans. And the Trump Administration expanded access to hardship exemptions in April 2018, allowing exemptions for people in areas where all plans cover abortions, areas where only one insurer (or zero insurers) offers plans in the exchange, or where a personal hardship is created due to the plan options available in the exchange.

In particular, the provision for people in areas where just one insurer offers plans in the exchange makes a hardship exemption available to far more people, allowing them to potentially purchase a catastrophic plan (albeit without premium subsidies, making this a realistic alternative only for people who aren’t otherwise eligible for subsidies).

Catastrophic plans are available both in and out of the ACA’s health insurance exchanges, but hardship exemptions for those 30 and older must be obtained from the exchange.

If you’re eligible for a catastrophic plan and shopping for health insurance in your state’s exchange, you’ll see that option in addition to the Bronze, Silver, Gold and Platinum plans. If you’re not eligible, it won’t show up as an option.

Although the ACA places strict limits on who can purchase a catastrophic plan, Colorado lawmakers passed a bill in 2018 that calls for a study of how expanded access to catastrophic plans would affect Colorado’s insurance market, both in terms of total subsidies received by Colorado residents, and overall premiums. Depending on the outcome of the study, the state will seek a waiver from the federal government in order to allow anyone to purchase a catastrophic plan.

Catastrophic plans: High deductibles, plus primary care and preventive care

  • Catastrophic plans cover all of the essential benefits defined by the ACA, but with very high deductibles, equal to the annual limit on out-of-pocket costs under the ACA (for 2018, this is $7,350 for an individual).
  • They must still limit members’ out-of-pocket costs for in-network services to no more than the annual out-of-pocket maximum that applies to all plans (the cap is $7,350 for an individual in 2018).
  • Catastrophic plans cover at least three primary care visits per year before the deductible is met (copays can apply for these visits, but at least part of the cost will be paid by the insurance company, even if you haven’t met your deductible).
  • And like all ACA-compliant plans, catastrophic plans cover preventive care with no cost-sharing.
  • Other services beyond preventive care and some primary care will be paid by the insured until the deductible is met.

Subsidies can’t be used to offset the cost of catastrophic plans

Premium subsidies are not available for catastrophic plans (nor are cost-sharing subsidies, which are only available on Silver plans). Depending on your income, you may be eligible for a subsidy that you could apply towards a metal-rated plan. This might make a Bronze or Silver plan even more affordable than a catastrophic plan.

Catastrophic plans are not HSA-qualified

Health savings accounts (HSAs) are a type of tax-advantaged account to which people can contribute pre-tax money as long as they’re covered by an HSA-qualified high deductible health plan (HDHP). In layman’s terms, “catastrophic” and “high-deductible” are often used interchangeably. But in health policy, they each have strict definitions:

  • HDHPs that allow a member to contribute to an HSA are not allowed to cover any care before the deductible, with the exception of preventive care, and the maximum out-of-pocket amount for an HDHP in 2018 is $6,650 for an individual (here are the IRS rules that pertain to HSAs/HDHPs).
  • Catastrophic plans are required to cover at least three primary care visits before the deductible, and they have deductibles that are higher than the allowable limits for HDHPs (in 2018, catastrophic plans have deductibles of $7,350).

So by definition, catastrophic plans cannot be HSA-qualified, and catastrophic plan enrollees cannot contribute to HSAs. If you want to be able to contribute to an HSA, you’ll need an HSA-qualified plan. These are typically either bronze or silver plans, but they cannot be catastrophic.

Very few people enroll in catastrophic plans

Because catastrophic plans are not subsidy-eligible and are only available to some enrollees, very few people tend to select these plans. In 2017, less than 1 percent of all exchange enrollees nationwide opted for catastrophic plans.

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