Author Topic: Non ACA (short term/skinny/catastrophic) healthcare  (Read 580 times)

studentoflife

  • 5 O'Clock Shadow
  • *
  • Posts: 11
Non ACA (short term/skinny/catastrophic) healthcare
« on: November 07, 2019, 05:27:39 AM »
We are evaluating health insurance options for 2020. I do not receive health insurance through work and our income exceeds the limits for ACA subsidies. From 2016-2017, I had an unsubsidized bronze marketplace plan costing $430/month with a $7,000 annual maximum. For 2018-2019, I've joined on my spouse's work-sponsored health plan, which provides a lower deductible, copays, and coninsurance, and whose cost of $600/month is deducted from my spouses's pre-tax income, making its true cost closer to $480/month. This is a huge change over the $70/month I was paying in 2013!

I am in my mid-30s and healthy. My family history is very healthy - no history of chronic health problems or cancer, 3 of 4 grandparents lived past 95. However, I work in a hazardous occupation and enjoy some leisure activities that can be risky.

With the changes to the ACA (deletion of individual mandate), I am considering cutting the fancy health insurance in favor of a "short term" plan for 2020. At prices from $75-$150, through the year we would pocket $4000-$5000 in premium savings. I'm OK with a high deductible and high annual max. I figure if I go out of pocket $5,000/year (this is 3x my most expensive medical year, which included an ER visit and follow-up care for a broken bone), I'm still breaking even with paying the high premiums of an ACA or employer plan. However, I'm concerned about the coverage limits (they seem to be 1M-2M) and what exclusions may be lurking in the fine print. I don't want to have a serious accident, only to find out I'm not covered due to some fine print. I'm OK with taking a $10k risk, less so a $100k-2M risk!

I'm hoping this community can provide some insight and help me make this decision.

Cranky

  • Magnum Stache
  • ******
  • Posts: 2763
Re: Non ACA (short term/skinny/catastrophic) healthcare
« Reply #1 on: November 07, 2019, 05:32:18 AM »
The point of insurance is not really to cover your regular costs, but to cover your possible catastrophic costs. I wouldn't buy any health insurance with a cap, because you are one major car accident from maxing that out.

Ockhamist

  • Stubble
  • **
  • Posts: 117
Re: Non ACA (short term/skinny/catastrophic) healthcare
« Reply #2 on: November 07, 2019, 07:00:54 AM »
The whole point of health insurance is to cover the big costs.  Those costs can be really big.   Huge.   Get a major illness and there's not much difference between having "skinny" insurance versus just not having any insurance at all.

Those "skinny" plans are cheap for a reason.

Part of the reason is high deductibles.   If you can live with that risk, it makes sense to have a high deductible, and take the moderate risk of several thousand dollars of medical costs yourself.   High deductibles are generally a frugal approach to insurance, if you are comfortable taking the risk.

Part of the reason is coverage caps.  Those put you at risk of not having enough coverage for a serious illness, which can be both financially disastrous (lots of bankruptices due to medical costs) and healthwise (those who cannot pay do not exactly get priority access to the best treatments.)   Coverage caps go against the point of having insurance.  Nothing frugal about that at all.

If you had a $20,000 car, would you buy insurance that only covered you up to $2,500 in losses?   Same idea here really.

"Skinny" plans are a terrible idea financially.   If you don't think you have much risk, and want to keep premiums to a minimum, go with a high deductible plan.   You'll take a hit financially with one of those if you have significant claims, but you won't risk bankruptcy or the inability to get needed care.
« Last Edit: November 07, 2019, 12:06:27 PM by Ockhamist »

Fuzz

  • Bristles
  • ***
  • Posts: 406
Re: Non ACA (short term/skinny/catastrophic) healthcare
« Reply #3 on: November 07, 2019, 12:00:09 PM »
There was a NYT article about these plans. Or maybe the Atlantic. Basically, do your homework. The exclusions in the plan are crazy and the owners of the plans are crooks. There was one plan where there was 750K in coverage, but only $5000 per surgery. Something like that. Basically, the person had to have 250 separate surgeries within a year to max out the 750K in coverage. If they had one surgery that was 85K, they were on the hook for 80K. The salesperson promised the woman who bought the plan the moon. And she has a decent case for fraud since she went bankrupt and incurred 100s of thousands in meds that Obamacare would have paid for.

The reason the plans are cheap is because they don't cover anything. Buying one of those plans is basically the same as going uninsured, but you don't get the Obamacare tax penalty. As someone who was uninsured for a while, that may be a rationale thing to do. But it's certainly risky.

My guess (not firsthand knowledge) is that when someone sells one of those plans, they make more the 20% of the premium as a commission. After the owner of the short term plan pays for his admin, marketing and yacht, how much is left over for member's health care costs?


studentoflife

  • 5 O'Clock Shadow
  • *
  • Posts: 11
Re: Non ACA (short term/skinny/catastrophic) healthcare
« Reply #4 on: November 07, 2019, 05:09:39 PM »
Thanks everyone for your responses. Wow, it seems even the frugal folks here are unanimous that this is an awful place to save money in our monthly budget!

@Cranky Good point about the cap. I agree with your philosophy about what insurance is for. Although I have to say, there are caps on the other insurance policies I hold. Our auto policy caps at $300k liability, my liability insurance for work caps out at $2M, etc. Most of these cap out at $1M or @2M - I would lean towards $2M. I've never heard of anyone receiving that much care in a year!

@Ockhamist Yes, I can absolutely live with (and prefer) high deductibles. What frustrates me is having a high deductible and a high premium - when I've gone out of pocket $3,000 in a year for medical expenses, I'm less than halfway to my out of pocket max, insurance hasn't covered a dime, and I"m still paying $600 per month for the premium!  I understand about the caps, but gosh, $2M seems like a really high cap. Yes, I get the point about bankruptcy, however, at least our residence and IRA/pension would still be there in that worst case scenario. I feel like I'm guaranteeing a bad outcome -  my insurance (not even including any other family members) is our largest monthly bill - I'm literally spending more every month just in case of some terrible incident, than I am for the house that keeps us and all our stuff warm and dry!

@Fuzz Your synopsis of that article/anecdote is exactly the kind of garbage I'm worried about with these plans.

I did not expect to be facepunched for trying to save! But thanks - I'll get an ice pack and think long and hard about sucking up the expense of fancy health care.