2013
One of the basics of health insurance is that the lower the deductible and other out of pocket costs, the higher the premium. This is simply because the risk of paying claims is higher when out of pocket costs are low. In addition, there is a tendency for people to use more health care when their cost sharing is low. In order to save on premium dollars many people, often younger and healthier, opt for a high deductible plan. Sometimes even people who do have health care expenses elect a high deductible plan because premiums are more affordable.
However, beginning in January, Obamacare restricts the use of high deductible health plans. The law seeks to protect people from high out of pocket costs, but in the process increases the premiums some Americans will pay for coverage. In essence, most people over age 30 will not be able to buy a catastrophic health plan. However, somewhat counter intuitively there is a hardship exemption. Very low income people over age 30 who cannot afford the premiums can buy catastrophic coverage, but that begs the question of how such individuals will afford high out of pocket costs.
From Kaiser Health News
The law will also put limits on high-deductible policies like those chosen by Laurie Simons, 62, and Mary McVey, 50 — meaning they pay significant sums out of their own pockets before their coverage kicks in.
Starting in January, new policies must cap annual “out-of-pocket” costs, which include deductibles and co-insurance payments, to about $6,350 for an individual, or $12,700 for a family – amounts that could still be a stretch for many consumers.
“There aren’t that many Americans who have that kind of cash just sitting around,” said Karen Pollitz of the Kaiser Family Foundation, who has studied the individual market. (KHN is an editorially independent program of the foundation.) “For the middle-class uninsured, it may still be a struggle.”Nonetheless, the law’s caps will reduce the cost-sharing in many plans currently sold, including those purchased by Simons and McVey.
Almost a third of plans currently offered to consumers exceed those caps, according to the U.S. News/Kaiser Health News analysis.
When Simons, a self-employed mental health counselor in Portland, Maine, switched to a high-deductible plan to reduce her monthly costs, she was healthy. But earlier this year, she was diagnosed with melanoma. Now she must find $11,000 to pay for her surgery.
via Big Changes Ahead For Those Who Buy Their Own Insurance – Kaiser Health News.
What is a catastrophic health plan?
According to Healthcare.gov
Health plans that meet all of the requirements applicable to other Qualified Health Plans (QHPs) but that don’t cover any benefits other than 3 primary care visits per year before the plan’s deductible is met. The premium amount you pay each month for health care is generally lower than for other QHPs, but the out-of-pocket costs for deductibles, copayments, and coinsurance are generally higher. To qualify for a catastrophic plan, you must be under 30 years old OR get a “hardship exemption” because the Marketplace determined that you’re unable to afford health coverage.
People 30 and over with low incomes for whom other insurance is not considered affordable or who have received a hardship exemption from the fee may be able to buy these catastrophic plans in the Marketplace.
Hardship exemption (from paying a fee for not carrying qualified health insurance)
Uninsured people won’t have to pay a fee if they:
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are uninsured for less than 3 months of the year
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are determined to have very low income and coverage is considered unaffordable
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are not required to file a tax return because their income is too low
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would qualify under the new income limits for Medicaid, but their state has chosen not to expand Medicaid eligibility
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are a member of a federally recognized Indian tribe
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participate in a health care sharing ministry
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are a member of a recognized religious sect with religious objections to health insurance
If you don’t qualify for these situations, you can apply for an exemption asking not to pay a fee. You do this in the Marketplace.
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