Low-premium, high-deductible health plans are endangered by Affordable Care Act

August 12, 2013

Rod Coons and Florence Peace pay $403 a month for a family health plan that covers barely any medical care for either of them until he or she reaches up to $10,000 in claims in a given year. 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 electronics manufacturing business in Indianapolis. Beyond their premium, the couple typically spends no more than $500 annually on medical care, Coons says. “I’d prefer to stay with our current plan.”

That won’t be an option next year. 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 providing 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, experts say, nor will many other plans that require high cost-sharing or provide limited benefits — by excluding prescription drugs or doctor visits from coverage, for example. Plans next year can continue to be linked to a health savings account, however.

According to the Department of Health and Human Services, based on the 10 states (and the District) that have so far proposed individual market premiums for next year, the average monthly rate will be $321 per person for a mid-level plan.

Many policyholders don’t realize their current plans won’t meet the standards set by the Affordable Care Act next year.

When the online health insurance agency eHealthinsurance began notifying people in non-grandfathered plans that they’d have to change policies in January, the company got so many calls that it shut down the planned week-long e-mail campaign after one day.

Carrie McLean, the company’s director of customer care, says people who got the e-mail “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. The couple may qualify for subsidies available to people with incomes up to 400 percent of the federal poverty level ($62,040 for a couple in 2013).

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 probably be eligible for subsidies on the state marketplace, Knight, 64, says she’ll stick with her grandfathered plan until she turns 65 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 services.

Many experts scoff at the argument that people who are healthy and don’t use many medical services don’t need more than a policy with a very high deductible.

“Unfortunately, people have catastrophic things happen to them, or they get chronic conditions that expose them to serious financial harm,” says Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms.

“The [ACA] provisions are designed to protect people from potentially ruinous medical bills,” Corlette says.

This column is produced through a collaboration between The Post and Kaiser Health News. KHN, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health-care-policy organization that is not affiliated with Kaiser Permanente. E-mail: questions@kaiserhealthnews.org.

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