Whether you have employer-sponsored health insurance or purchase coverage through the marketplace exchange, you’re probably well aware that your insurance premiums have been increasing significantly each year. And the outlook for 2018 rates doesn’t look any better. On average, premiums are currently estimated to increase between 16 and 30 percent across the country.
To help reduce their premium rates, more and more people are turning to high deductible health plans (a plan that has an annual deductible of at least $1,300 for individual coverage, or $2,600 for family coverage in 2017; $1,350 and $2,700, respectively in 2018). According to the CDC’s National Center for Health Statistics, nearly 40% of Americans between the ages of 18 to 64 are now covered by a high-deductible health plan. Additionally, many Americans are now turning to short term medical plans for protection.
Unfortunately, the CDC’s study also showed that some people with high deductible health plans choose to forgo or delay seeing a doctor or receiving medical care. This correlates with findings related by health insurers to benefit consultants that 70 percent of insured members don’t spend more than $1,000 a year on health care costs. The reason: many of these people are not using their insurance because their deductible is so high and they can’t afford to pay it up front. The good news is that a fixed dollar zero deductible plan – also known as a limited medical benefit plan – can eliminate a medical deductible altogether and provide defined cash benefits to help pay for health care services whenever you need them.
What is a Fixed Dollar Zero Deductible Plan?
Designed as an alternative to major medical insurance coverage, Pivot Health’s most comprehensive fixed dollar zero deductible plan, called PivotCare Elite, provides you easy-to-use benefits that start right away when you receive health care services related to a covered illness or injury. The zero deductible plan pays a fixed amount of cash for trips to your doctor’s office, visits to the emergency room, lab tests, x-rays and MRIs, hospital stays, surgeries and anesthesia, and even childhood immunizations. The benefits are paid no matter what doctor you see or how much the facility charges for health care services, breaking you free from paying a high deductible before your benefits kick in.
In addition, PivotCare Elite fixed indemnity plans offer:
- Set dollar amount payments for covered services, whether you visit an in- or out-of-network provider
- Critical illness coverage, to provide you extra financial protection (in addition to the plan’s daily cash benefits), for catastrophic medical emergencies, such as stroke, heart attack, invasive cancer and end-stage kidney failure (certain state restrictions apply)
- Fracture, burn and dislocation benefits
- A discount prescription drug card
- Benefits for ground and air ambulance services
- Coverage for mental health and substance abuse care
- Accidental death and life insurance benefits (certain state restrictions apply)
To best meet your benefit and budget needs, PivotCare Elite offers five different zero deductible plan choices, which provide a variety of coverage levels. In addition, all PivotCare plans participate in the First Health Preferred Provider Organization (PPO) Network, one of the largest networks in the nation, which includes:
- More than 5,000 hospitals
- More than 90,000 medical facilities
- Over 550,000 professional medical providers throughout the country
You are not required to use a provider or facility within the First Health network on the PivotCare plan. However, if you choose to do so, you receive an immediate discount on your medical services.
The specific benefit amounts will vary among states, depending on each state’s regulations, so be sure to check the plan details for specific policy information.
How Do Fixed Indemnity Plans Work?
One of the greatest advantages of a PivotCare fixed indemnity plan is that there are no deductibles or coinsurance. The plan provides you “first dollar” coverage, which means that the plan starts paying you as soon as you incur bills for covered medical services. These cash payments provide you a significant financial benefit, helping you cover the out-of-pocket expenses that would be your responsibility under a major medical plan.
Example: Comparing Out-of-Pocket Costs for the Jones Family’s Claim
- The Jones family of four lives in the Chicago area.
- Mr. and Mrs. Jones are each 35.
- Their children are ages 10 and 8.
- Their earned income is $200,000 per year.
- Neither of the parents use tobacco.
When shopping for health insurance during open enrollment, the Jones family reviews a Bronze plan through the marketplace exchange. For 2017, the exchange plan’s monthly premium is $900 ($10,800 per year), and the plan has an annual deductible and an out-of-pocket family maximum of $14,300 (and an individual out-of-pocket maximum of $7,150).
By purchasing the best-selling PivotCare Elite plan, the Jones family could pay a monthly premium of $338 ($4,056 per year), and not have an annual deductible or an out-of-pocket minimum.
Sound too good to be true? Let’s take a look at a real-life example with the Jones family. One of the most typical family medical emergencies is a broken arm. If one of the Jones children broke their arm and saw a traditional in-network doctor, the total cost for setting the bone, anesthesia, and the costs for the hospital visit or ambulatory center would total $1,574. With a Bronze marketplace plan, the Jones would be responsible for paying 100 percent of the $1,574 bill because they would need to meet the $7,150 individual out-of-pocket maximum first. But with a Pivot Care fixed indemnity plan, 100 percent of the medical bills would be paid by the insurer. Here is how the math breaks out:
| Medical Procedure | In-Network Cost | PivotCare Reimbursement pays | Bronze Plan pays |
|---|---|---|---|
| Treatment of dislocated forearm bone at elbow | $531 | $1,000 | $0 |
| Anesthesia | $607 | $200 | $0 |
| Hospital Outpatient or Ambulatory Surgical Center | $436 | $200 | $0 |
| Fracture Benefit | — | $1,250 | $0 |
| TOTAL | $1,574 | $2,650 | $0 |
| Jones Responsibility with PivotCare | Jones Responsibility with Bronze Plan |
|---|---|
| $0 | $1,574 |
This example demonstrates that the PivotCare Elite plan would save the Jones family over $6,700 a year in premium costs, and would eliminate a deductible, saving them out-of-pocket expenses.
How Much Do Zero Deductible Plans Cost?
Just like any type of insurance, premium rates for fixed indemnity plans will depend on the coverage level you choose. For the Jones family referenced in the previous example, the five plan options available to them range in monthly premium costs from $165 to $619 per month. The value of this type of plan which pays you cash benefits as soon as you use health care services is clear to see, especially as health care expenses keep growing. This plan also can be used in conjunction with a high deductible major medical plan, if you wish, helping reduce your major medical plan’s out-of-pocket expenses.
Costs Projected to Continue Rising for Major Medical Plans
When the Affordable Care Act was signed into law, its goals included:
- Reducing health care costs while improving the efficiency of health care services – despite the U.S. spending significantly more money on health care than other countries, there are many areas in which the U.S. does not have the most positive patient outcomes
- Expanding access to health insurance – implementing the marketplace exchange and reducing the eligibility requirements for Medicaid to make insurance more accessible to the millions of Americans who had no health insurance
- Shifting the health care system’s focus from treatment to prevention – with 75 percent of the country’s health care dollars spent on treating preventable conditions, the law intended to incent communities and public health agencies to invest in primary care prevention programs
However, despite the goal of reducing health care costs, a study by eHealth, Inc. shows that from 2013 through early 2017, individual health insurance premiums increased 99 percent, and family premiums increased 140 percent. Early estimates for 2018 predict premiums rising an average of 16 to 30 percent. Further, health care costs – and associated health insurance prices – are anticipated to continue growing faster than the country’s economy through 2025, according to a national health expenditure projection by the Centers for Medicare & Medicaid Services.
To help contain the impact of these costs, more employers and insurers are shifting a greater share of health care costs to individuals and families, by increasing deductibles, coinsurance rates, copayment amounts and out-of-pocket maximums. The bottom line is that your out-of-pocket costs with a major medical insurance plan will only continue to increase over time.
Example: Projected Bronze Tier Plan Premiums for the Jones Family
If the Jones family decided to purchase a Bronze tier exchange plan for the next five years, here’s a look at how their plan premiums might increase over time:
| Projected Bronze Tier Marketplace Plan Premiums* | |
|---|---|
| 2018 | $12,960 |
| 2019 | $15,552 |
| 2020 | $18,662 |
| 2021 | $22,395 |
| 2022 | $26,874 |
*Based on a projected annual increase of 20 percent, due to rising health care costs and the increasing ages of the Jones adults (under the Affordable Care Act, a policyholder’s age is used to determine health insurance premium costs).
When calculating the costs associated with your major medical insurance, it’s important to consider more than your premium payments. Each year since the Affordable Care Act took effect, the maximum out-of-pocket limit has increased, and undoubtedly will continue to rise annually. It’s reasonable to anticipate that out-of-pocket maximums will continue to rise between $500 to $600 per year, based on the past increases as shown below:
| Historical Bronze Tier Out-of-Pocket Maximums | |
|---|---|
| 2014 | $12,700 |
| 2015 | $13,200 |
| 2016 | $13,700 |
| 2017 | $14,300 |
| 2018 | $14,700 |
Fixed Dollar Zero Deductible, Limited Medical Benefit Plans – Cash in Your Pocket
It’s a fact of life that accidents and illnesses occur. If you’re already spending your hard-earned dollars for health insurance that you feel is too costly to use, take some time to check into a fixed indemnity plan. It pays you cash benefits from the first dollar you spend on health care costs, helping reduce your out-of-pocket costs, and maximizing the value of your coverage.
PivotCare plans are designed specifically for the types of medical claims that most families incur most often. It is not designed to cover all medical costs.