Although both of these types of health policies begin with a "c," that's nearly all they have in common. Keep reading to learn more about them how they differ from each other.
If you've ever shopped around for health insurance, you've probably come across articles or sites that mentioned "Cadillac" or "catastrophic" plans.
Those articles and sites don't always do a great job of explaining what the plans are or what they cover, though. And sometimes they fail to make it clear who can get these plans, or who should get them.
Thankfully, this write-up covers all of that information and more. So keep reading to learn everything you need to know about catastrophic and Cadillac health insurance.
The first thing you need to know about this type of plan is that no company sells something specifically called Cadillac health insurance.
Instead, it's journalists, politicians and even consumers who refer to expensive health policies as "Cadillac plans"--and they've been doing it for decades now. Why? The most likely answer is that Americans have associated the name (and word) Cadillac with luxury and quality since the carmaker first made its mark in the early 1900s.
Whatever the reason, high-cost health insurance is now commonly known as Cadillac health insurance.
As for what high-cost means in this case, there are no hard-and-fast rules. In general, though, these plans cover even the most expensive treatments, as AARP points out. Policyholders often have to pay high monthly premiums to access that coverage, but usually they're offset by low deductibles.
At least, that's how most consumers and journalists look at these policies. Politicians look at them somewhat differently. To them--or more specifically to the men and women on the U.S. Senate Committee on Finance--the total cost of a policy's premiums, rather than a particular set of benefits, determines whether or not it's a Cadillac plan.
In particular, any health plan with yearly premiums that come to more than $10,200 for individual coverage or $27,500 for family coverage is a Cadillac plan as far as the U.S. government is concerned.
That doesn't mean much now, but it will soon--especially to American employers. Unless Congress acts against it, a tax included in the Affordable Care Act, also known as Obamacare, will require companies to pay a 40-percent tax on employee health plans valued above the $10,200 and $27,500 thresholds mentioned earlier starting in 2020.
You might say that catastrophic health insurance is the polar opposite of Cadillac health insurance.
Most people get Cadillac plans through their employers. To get a catastrophic plan, however, you'll likely need to go through a health insurance marketplace or exchange. (Learn about the best and worst health insurance exchanges.)
Also, while Cadillac plans generally mean high premiums and low deductibles, catastrophic plans usually come with low premiums and high deductibles. In fact, the deductible for all catastrophic plans sold through the federal marketplace in 2017 is $7,150.
On a positive note, your insurer pays for all covered treatments and services after you reach your deductible for the year. And in the meantime, it'll cover certain forms of preventive care as well as up to three visits to a primary care physician annually. That's true whether or not you've hit your deductible.
Before you race off to healthcare.gov or the website of your state exchange, consider that you can only enroll in a catastrophic plan if:
Also keep in mind that these policies exist to protect people from medical emergencies. If you qualify for a premium tax credit based on your income, buying a more traditional plan through the health insurance marketplace should be a better value, according to healthcare.gov.
Two more reasons catastrophic health insurance plans aren't for everyone:
Don't fret if this type of policy is your only option, though. It'll provide the same minimum benefits as other marketplace or exchange plans. Plus, it'll keep you from going into debt if you're given a serious diagnosis of if you're severely injured.
A: The main differences are that people with Cadillac policies usually pay high premiums and low deductibles. People with catastrophic policies, on the other hand, usually pay low premiums and high deductibles.
Also, most people get Cadillac policies through their jobs while they get catastrophic policies through the federal or state marketplace.
A: Most people get this type of insurance through their work. That said, "Cadillac" is used to describe any kind of high-cost health policy, so employers aren't the only avenue to enrolling in one.
A: Those who are currently uninsured are the most likely to need this kind of plan. Although they come with high deductibles, they'll protect you if you're severely injured or diagnosed with something serious like cancer.
Also, these plans pay for up to three doctor visits per year as well as some preventative care. This is true even before you hit your deductible. And after that, they pay 100 percent of your health expenses.
A: Yes, though most Americans get one through an employer.
A: Only two groups of people can buy these plans. One group is anyone under the age of 30. The other group is anyone who qualifies for a hardship exemption. You qualify for an exemption by showing you can't afford job-based insurance or other plans sold through the federal or state marketplace. You don't have to be under 30 if qualify for a hardship exemption.
A: Work for an employer that offers expensive health insurance covering a wide range of treatments and services.
A: You'll probably have to pay high monthly premiums to maintain one of these plans. The good news is your yearly deductible should be low. Also, those hefty premium payments will provide you with some of the best coverage available.
A: These plans are expensive--especially at first. This is because you have to pay a lot of money out of pocket before they cover your health expenses. Specifically, most of these plans carry deductibles of over $7,000.
Still, once you reach that amount, which is likely if you're badly injured or diagnosed with something like cancer, your plan pays for 100 percent of your health care. And even before then it pays for three doctor visits each year plus some preventative services.
I've often heard "Cadillac tax" mentioned in relation to health insurance. What is it? Could it impact me and my insurance payments or coverage?
When the Affordable Care Act passed in 2010, it included an excise tax the media and some politicians call the "Cadillac tax." It levels a 40-percent tax on employers that spend more than a certain amount on employee health plans. As mentioned earlier, that amount is $10,200 for individual coverage and $27,500 for family coverage.
So, if a company offers individual coverage that costs $13,000 a year, it would owe the government 40 cents on every dollar spent above the $10,200 limit. In this case, it would owe 40 percent of $2,800.
This tax was to go into effect in 2018, but last year Congress delayed it to 2020.
Although the tax focuses on employers, that doesn't mean it won't impact employees. For example, the Kaiser Family Foundation says the deadline is "encouraging employers to assess their current health benefits and consider cost reductions to avoid triggering the tax."
A few of the ways companies are reducing or could reduce costs in advance of this tax's implementation:
Some employers made these changes back in 2014, according to the Kaiser Family Foundation, but "more are likely to do so as the implementation date gets closer."
That could be a problem for employees, as "for the most part these changes will result in employees paying for a greater share of their health care out-of-pocket."
QuoteWizard.com LLC has made every effort to ensure that the information on this site is correct, but we cannot guarantee that it is free of inaccuracies, errors, or omissions. All content and services provided on or through this site are provided "as is" and "as available" for use. QuoteWizard.com LLC makes no representations or warranties of any kind, express or implied, as to the operation of this site or to the information, content, materials, or products included on this site. You expressly agree that your use of this site is at your sole risk.