Rod Coons and Florence Peace, a married couple from Indianapolis, pay $403 a month for a family health plan that covers barely any of their individual medical care until each reaches up to $10,000 in claims. And that’s just the way they like it.
“I’m only really interested in catastrophic coverage,” says Coons, 58, who retired last year after selling an electronic manufacturing business. Since they’re generally healthy, the couple typically spends no more than $500 annually on medical care, says Coons.
“I’d prefer to stay with our current plan because it meets our existing needs.”
That won’t be an option next year for Koons and Peace. In 2014, plans sold on the individual and small group markets will have to meet new standards for coverage and cost sharing, among other things. In addition to covering 10 so-called essential health benefits and covering many preventive care services at no cost, plans must pay at least 60 percent of allowed medical expenses, and cap annual out-of-pocket spending at $6,350 for individuals and $12,700 for families. (The only exception is for plans that have grandfathered status under the law.)
Plans with $10,000 deductibles won’t make the cut, say experts, nor will many other plans that require high cost sharing or provide limited benefits, excluding prescription drugs or doctor visits from coverage, for example.
According to the Department of Health and Human Services, based on the 10 states and the District of Columbia that have so far proposed individual market premiums for next year, the average individual monthly rate will be $321 for a mid-level plan.
Many policyholders don’t realize their plans won’t meet the standards set by the Affordable Care Act next year, say experts.
When online health insurance vendor ehealthinsurance.com began notifying people in non-grandfathered plans that they would have to change policies next January, they got so many calls that they shut down the planned week-long email campaign after one day.
“The people that received the email were not happy at all,” says Carrie McLean, the website’s director of customer care. “They said, ‘What are you talking about? I thought I was already on an ACA plan.'”
Coons is none too pleased either.
“I’m happy with where I’m at right now, but it doesn’t look like that’s where I’m going to be at in the future,” he says.
Coons plans to look for coverage through the online state marketplace next year. The couple may qualify for subsidies that are available to people with incomes up to 400 percent of the federal poverty level ($62,040 for a couple in 2013) to make coverage more affordable.
Rainy Knight also has a plan with a $10,000 deductible. The Vancouver, Wash., substitute teacher says that on her limited income, the $279 monthly premium is all she can afford. She’s healthy and has used her coverage only a few times in recent years for minor problems and preventive care.
Even though she would likely be eligible for subsidies on the state marketplace, Knight, 64, says she’ll stick with her grandfathered plan until she turns 65 next July and becomes eligible for Medicare.
“If I apply [for an exchange plan], they’re going to charge me even more money,” she says.
Health policy experts point out that even though the sticker price on a plan may be higher next year, many people will qualify for subsidies that will make coverage more affordable. In addition, the health plans offered on the individual market next year will provide much better coverage than many existing plans, they say.
In addition to high deductibles and skimpier coverage, current policies often have significant cost-sharing requirements, including separate deductibles or caps on coverage for different types of services. After meeting their deductibles, Rod Coons and his wife still owe 30 percent of most medical expenses they incur, for example, up to their annual out-of-pocket maximum of $15,000 each. Knight’s policy is even less generous: she’s responsible for covering half of her medical bills once she reaches the deductible, up to her annual out-of-pocket maximum of $15,000.
Many experts scoff at the argument that people don’t need more than a very high-deductible policy because they’re healthy and don’t use many medical services.
“Unfortunately, people have catastrophic things happen to them, or they get chronic conditions that expose them to serious financial harm,” says Sabrina Corlette, research professor at Georgetown University’s Center on Health Insurance Reforms.
“The [ACA] provisions are designed to protect people from potentially ruinous medical bills,” says Corlette.
Please send comments or ideas for future topics for the Insuring Your Health column to firstname.lastname@example.org.