What is Going to Happen to Catastrophic Health Insurance in 2014?

All health insurance policies in 2014, must provide a comprehensive set of benefits because of the Affordable Care Act.  So, all health insurance programs, including Catastrophic Insurance, will undergo changes as a reflection of this new law. 

Essential Benefit Package – What This Means for Insurance

Let’s talk about the “essential benefit package” first to frame our discussion. The following  essential benefits will need to be included in any insurance plan beginning in 2014:

  • ambulatory patient services
  • emergency services
  • hospitalization
  • maternity and newborn care
  • mental health and substance use services
  • prescription drugs
  • rehabilitative services
  • laboratory services
  • preventive and wellness services
  • chronic disease management
  • pediatric services

A catastrophic health policy  in 2014 must cover the above essential benefits. It also has to cover 3 visits to a primary care giver. 

A catastrophic plan will require cost sharing up to the  Health Savings Account (HSA) out of pocket limits.  Presently, these limits are $5,950/individual and $11,900/family. 

Lastly (and most importantly), only individuals under 30 years of age can enroll in this plan who are not using a tax credit to get coverage. If you are an employer and think you can offer a catastrophic health plan to your employees under 30 years of age, think again.  A catastrophic plan is not considered a minimum essential coverage and thus does not meet  requirements under the Affordable Care Act.

What does meet the meet the health coverage requirements in 2014?

There are four levels of coverage in the new health reform law in 2014 and each requires a specified percentage of costs. The percentage of total covered expenses for health insurance  is referred to as the actuarial value.  So the four levels of coverage are Bronze (60% actuarial value), Silver (70%), Gold (80%), and Platinum (90%).  If the actuarial value is 90% as in the Platinum, the consumer would pay an average of 10 percent of the cost of health care expenses.  Obviously, the greater the coverage as in the Platinum, the higher the premiums or your costs would be. 

Insurance Will Cost More

The President promised that we could keep our health insurance  if we were happy with them.  Wrong.  If you have a catastrophic plan now and feel it meets your needs, you will have to change to a more comprehensive plan. A more comprehensive plan means more money. A non-partisan Congressional Budget Office suggested that average premiums for those buying insurance as individuals will be about 10-13 percent higher in the year  2016. Group plans offered by employers will have smaller increases. Even when you hear that grandfathered plans will be honored, know that all plans have to make specific changes for more inclusions and coverage whether you want it or not.

There are no bare bones or catastrophic plans with the new health reform. We will all have to wait and see what changes, if any, occur over the next couple of years.  In the meantime, you can keep your catastrophic or high deductible health plan, or purchase one if you don’t have insurance.  Take advantage of the affordable health insurance now.