Switching from a full-service health plan to a catastrophic care plan - Good Idea?

[mamasaurus]

We are a family of four and pay nearly $1000 a month for health insurance.  It is run through my DH's business, which is a corporation, so the premiums are deductible and paid for with before-tax dollars. 

However, it is ONE THOUSAND DOLLARS a month!  Really expensive.  It is a top-notch plan, preferred provider, we can go anywhere, pay practically nothing, but still.

We are all healthy, no chronic problems, etc.

I am looking at us switching to a catastrophic care plan through Blue Cross in our state.  We can handle the $5000 deductible.  We would just take money that we had been paying into the current health insurance and set it aside into a special account.  The plan would be personal, not a company plan.  Which means we would for it with after-tax dollars.  But it's only $277/month. 

Does anyone have a catastrophic care plan?  What are the pros and cons?  Will they cover all the important stuff? 

Thanks for any tips!

[JudiAU]

I wouldn't personally because everyone I've known who has had them has had the bad luck to get ill. They cover much less than you think, often have fairly low caps and other limits including excluding losts of chronic diseases that you may get during the life of the policy. Also, depending on where you are, they may not be seen as real insurance meaning if you get sick and try to go back to a conventional policy, the problem will be excluded. The new law makes an exception for kids only.

 I'd look around for a better rate perhaps with less generous benefits. Full health insurance is one of the last, last things I would give up for my family.

[lilyka]

Do you have a middle ground?  I have a BCBS plan where I have a $2500 deductable  plus a $25 pap each year.  Once I meet the deductable everything is free.  So the most I pay out each year is my premium (which is $12 a month compared to their "good" plan which was about $60  a month and still had copays and coinsurance) and $2500.  I can put up to $2500 in a savings account pretax and it rolls over from year to year.    It is better coverage than catastrophic but way cheaper than standard.  The down side is I did end p very sick this year and have met my deductable already and did not put it into a tax free account.  which blows. Everything else is free though :D yippee.

How about a lower premium with a higher deductable and co-pay? It sounds like you have an insanely top notch plan which would be great if it were not costing you $12,000 a year.  I mean even a $2500 deductable sounds doable when you look at how much this is costing you.

[lookatreestar]

i would do it, but i honestly refuse to live in fear of "what if" will happen. 1000 dollars a month is insane imo.

(eta you didn't state income so it would depend on that for me as well... obviously if you are making 100k a year then i say keep it, but 40k would be a different story )

[SunRise]

The catastrophic I have covers:

Pros

~a yearly mammography, which is a positive factor to this plan. (if I would actually take advantage of it; its a positive thing because I am 44yrs old, may not be a big deal for a younger person)

~hospital care: I was advised, if I needed physical therapy for instance, if one goes to the hospital for this the insurance will cover it, if you go to a clinic, you will have to pay.

~sense of ...security.

~I have used the insurance once, when I butchered my finger in a blender (dumb). The insurance covered the emergency/hospital visit... 

Con:

~...I first went to prompt care (for that dumb incident), and they sent me over to emergency where the health insurance would cover it. That was a 4 hour wait for something that could have been taken care of in an hour. And I was told that would have been an $80 dollar visit ... which to me, is a manageable price to pay out of pocket.  Which is why I am reconsidering this product. But maybe I would not have gone in the first place if I had to pay and didn't know how much it cost.

~My catastrophic costs 650/mth. (it already went up 50 dollars since I had the insurance, and I anticipate a yearly increase of this amount.  Paying for it is starting to suck ... I would rather save this amount and renovate my kitchen.

~it doesn't cover well visits (or sick visits) - which is why it is called a catastrophic plan; so if one decides to go to a well or sick visit it is another $150-$500 (basic) out of pocket.

~I dropped my full coverage health insurance for the catastrophic option as the health insurance was a ridiculous amount ($1300/mth w/ a 200/mth dollar increase yearly (when I first got it, it was 900/mth). The deductible plan wasnt worth the montly payment (approx 900/mth PLUS the 2500 deductible)

For kids, I feel it is important (less stressful) having regular health insurance. Thankfully we live in a state that covers all children (on a sliding scale, I still pay 360/mth for this)

For an adult, I am weighing the difference between catastrophic (650/mth) (covered just in case (I get cancer?)) and not going to regular visits VS regular health insurance (950+ high deductible): going to regular visits + coverage in case..., but paying a ridiculous amount VS no health insurance (savings of 650+ / mth) and paying out of pocket 600 / yr. (for regular appointments) but not being covered just in case.

In general insurance gives me the push that I need to go get care, where no insurance becomes stressful, although paying 1000 / mth also becomes stressful.

Hopefully some of this is helpful; sorry for the winging parts but I find it hard to talk health insurance without "woeing" just a bit.

postscript: IT really amazes me the different prices people pay for health insurance, across the states. These are CNY prices. Outrageous.

Edited by SunRise - 8/12/11 at 9:07am

[camprunner]

We have something similar to lilyka.  All well visits are still covered. Just not sick visits. DH and I are much more likely to treat ourselves herbally now but do use common sense. When we have had to go to the doctor, the insurance still negotiated the price. 

We just fully fund our HSA the difference and the money is ours if we don't need it.

[ilovemygirl]

This is really hard one for me. I'm such a tightwad that I want to say save the money but health care is just so important. If someone were to develop a chronic disease the catastrophic may cover it but it will probably be within very specific parameters and with very few doctors who you may or may not like. Do you really want to deal with that should it happen? I think it really depends on how you feel about that kind of scenario. If it doesn't worry you so much then that's a lot of money to save.

Income is a big factor like the pp brought up. For me, if I could reasonably afford it, you'd never be able to pry a great plan like that away from me but if it's really hurting your budget it might be wise to let it go and save the money.

Let us know what you decide. GL .. 

[lilyka]

Originally Posted by camprunner 

We have something similar to lilyka.  All well visits are still covered. Just not sick visits. DH and I are much more likely to treat ourselves herbally now but do use common sense. When we have had to go to the doctor, the insurance still negotiated the price. 

We just fully fund our HSA the difference and the money is ours if we don't need it.

I forgot to mention.  That is another perk. I pay the insurance negotiated price. Even though I had to pay for my last trip to the ER, it was only $325.  That is actually what sold me on the plan.

And my employer will match up to $500 in my medical savings account.  Which is awesome.  Had I gotten on that it would have lowered my deductuctable to $2000.

I don't know how much my plan would be without my employer paying part.  We get a great rate because we are the largest employer in the state.  Hence my $12 premium.  Seeing what you guys pay it makes my just giddy to know at least I have good benefits if not good pay. ;-)

[Fuamami]

We have catastrophic care with a $10K deductible, and it's ~$150/month for our family of five. The deductible is a bit high for my comfort level, but right now things are really tight and I know we could get that kind of money from family members if necessary. We've had this kind of insurance for years, actually, and never had any major, major expenses. We also get one free well-child visit per kid and check-ups for me and dh (pap smear, too, for me).

I think the trick is to view your medical care differently. I ask how much visits cost and I negotiate a cash price for most of our visits. If the dr doesn't have to bill your insurance, they save a lot of money, so just ask them not to unless you think you're going to reach your deductible. I have always known we would only reach our deductible if something catastrophic happened - there's no way we would spend 10K on just regular sick visits - so I pay cash for everything and leave our insurance out of it.

[KatWrangler]

What is the max lifetime of the policy?

[Wolfcat]

Originally Posted by mamasaurus 

We are a family of four and pay nearly $1000 a month for health insurance.  It is run through my DH's business, which is a corporation, so the premiums are deductible and paid for with before-tax dollars. 

However, it is ONE THOUSAND DOLLARS a month!  Really expensive.  It is a top-notch plan, preferred provider, we can go anywhere, pay practically nothing, but still.

We are all healthy, no chronic problems, etc.

I am looking at us switching to a catastrophic care plan through Blue Cross in our state.  We can handle the $5000 deductible.  We would just take money that we had been paying into the current health insurance and set it aside into a special account.  The plan would be personal, not a company plan.  Which means we would for it with after-tax dollars.  But it's only $277/month. 

Does anyone have a catastrophic care plan?  What are the pros and cons?  Will they cover all the important stuff? 

Thanks for any tips!

I'm a super big fan of healthy people using health care plans for emergencies only, high deductable and a pre-tax dollar health savings account. I've used HSA's for years now and it ROCKS! Since I only have to pay $100/mo to keep me from going broke in once-in-a-while situations (pregnancy, emergencies, etc.), and the insurance company still negotiates the lower price for services, everything comes out of my HSA for paying off medical bills... glasses, dental, dr's visits, prescriptions, etc.

[mamasaurus]

Thank you so much for all the replies!

Would someone kindly explain to me how an HSA works? 

[MariesMama]

I have an HSA right now, with a catastrophic BCBS policy (Flexible Blue 2500).  I set it up through a local bank, since my employer offers no benefits, no nothing.  Your first step needs to be to call your local banks and find out who offers one.  Try to stick with a smaller, local bank, so that the account officer is more likely to sit down and fully explain everything to you.

Once you set it up, you will have a debit card and checks to use for your health related expenses.  I changed my direct deposit to send a portion of my paycheck straight to the HSA (how much you send depends on your family situation). 

When I have a copay, pick up a prescription, or get a doctor's bill, I simply use the debit card and pay with that.  If you don't have enough money in the account, you can simply deposit money in the account without having to wait for the next payday.  Sometimes, I swing by the bank, make a deposit, and then head straight over to the pharmacy.  It's just a matter of running the money through that account so that it becomes a tax deduction.  Some banks are pickier than others about withdrawals - I can use the ATM to take money out if I want, but my mother has to go in and prove that cash withdrawals are actually for qualified health expenses.

I believe there is a cap on how much you can deposit, but any money deposited can be rolled over to the next year. 

[Vaske]

IRS Publication 969 describes the different tax-favored health accounts.  To have a HSA, you have to have high-deductible insurance (only).  You can contribute pre-tax income to the account, up to an annual limit.  Some accounts have options for investing the funds.

[Fuamami]

I'm pretty sure that your HSA only makes it more convenient to deduct, but you can still only deduct if you meet the 7% of income rule, right? I think that's what happened with our taxes this year.

[Ragana]

We went from a personal plan paid for through my business (so tax deductible) to a similarly priced plan through my DH's work when he got a permanent position. Keep in mind the hit you will take on taxes from not being able to deduct the premiums. It may not matter depending on your income level, but it kind of screwed us up & the first year after we ended up paying a chunk in extra taxes.

[Wolfcat]

Our HSA is through work. We have pre-tax income deposited each payday. We can choose how much to put in (no limits as far as I know), but if we use the money for anything other than medical expenses, they need to be reported and taxed.

I've used the money for copays, deductables, past medical bills, dental, glasses, travel expenses (including hotel and meals) if the travel is for a medical purpose (Bug's eye doctor is a specialist 4 hrs away), bandaids, cough syrup, birth control, lactaid... You get the point.