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Copay and Deductible for Bronze Plan?

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Question: I’m little confused about deductible for Bronze Plan.I understand I have to pay $30 each for primary care visit when I choose gold plan. Covered CA website also states that gold plan primary care copay is not subject to deductible. Health insurance benefits chart posted on Covered CA website states that Bronze plan cares copay are subject to deductible. What does it mean? I though copay is cost for services to which deductible does not apply. For example, standard benefits says specialty care visit copay is $70 and deductible is $5,000. Hospital charge me $300 for specialty care visit. Do I have to pay $300 before deductible $5000 met? And then pay $70 for specialty care visit after deductible met? Or do I have to pay $70 regardless of deductible?

Answer: The Bronze plans copays are not subject to the deductible for up to 3 office visits, including pre-natal and post-natal visits, mental health and substance abuse visits, and urgent care visit. What that means to you is you pay only the copay. The emergency room and ambulance copays only come into play once the deductible has been met for a given calendar year. So if you have already spent $5,000 in covered medical expenses for the calendar year and you go to the emergency room, you will pay the $300 ER copay only. Now let’s say you’ve already met the out-of-pocket maximum, having spent $6,350 for the calendar year, you will pay nothing for emergency room services or any other covered expense.

8 Comments

Max Herr wrote: “Had HSAs been available 20 years ago, when I thought I was invincible, I probably would have been more inclined to fund one, too.”

They’ve been around for almost 10 years. You don’t have to think you are “invincible” to fund one- it’s a good deal for anyone who has the ability to shoulder the risk of their policy deductible and typically low end medical expenses. The money in the HSA does not have to be used for medical expenses; it’s a tax sheltered account that can be held or invested. The smartest financial decision is probably to hold the HSA but pay ongoing expenses out of pocket without touching the HSA. (I don’t do that mostly for psychological reasons - it’s easier to whip out the HSA Debit card - but at least I understand what I am doing).

Max wrote: “the $4300 could grow to a larger amount in your SEP retirement account, potentially offsetting the income tax due on withdrawal.”

I have a SEP as well; my contributions are limited by law in relation to my earnings from self-employment. I can’t put $4300 more than the max into the SEP; but I can put money into a Roth or regular IRA. The $4300 HSA is a shelter I can use on top of the others.

I’m not going to be pulling money out of my HSA to pay for non-authorized expenses. HSA’s aren’t designed for low income people who are scraping by month-to-month. They are geared to mid-level earners who can benefit from the extra tax break and from the forced savings to cover medical expenses.

As for dental expenses, you or anyone else over age 25 can purchase the “Dental HMO” plans, with $0 deductible and unlimited annual benefits for covered services for about $8-$17 per month everywhere in CA

My dentist and periodontist aren’t on any networks. They will accept the teensy payments from insurers and then bill me for the rest. Not going there.

You’ve mentioned your very commendable work signing people up for MediCal — so I applaud you for your public service — but your viewpoint might be colored through dealing with people for whom a $150 dental bill would be a true hardship. I”m not in that category: I’d consider it a “hardship” to have to forego the choice I have in care, especially after the issues I have recently dealt with. So again, I’m happy with my HSA.

Ah, yes, my statement was sure to touch a nerve or two of the “invincibles.” But that’s the tradeoff between the premiums and peace of mind in the world of insurance. I don’t like paying as much as I do for auto and homeowner’s either, but I pay nevertheless because I don’t like the alternatives. I haven’t had a significant claim under either type of policy in my 61 years. That’s pure luck

I’m not “invincible”, but I’m not poor either. I’m 59 years old and I’ve got ~$20K sitting in an HSA. The maximum out-of-pocket with a Bronze is $6350 (just like each other plan). Your missing the point as to what the plans cover when you compare to auto and homeowner’s insurance — because I can and do opt for higher deductibles in order to reduce premiums for those as well.

Insurance is all about covering risk. My maximum risk as a single person insured with a Bronze plan is $6350 of medical expense- if you factor in the cost of the plan, then it is $6350 PLUS the sum of the premiums. So if I buy the Blue Shield Bronze HSA and I incur high end medical expenses - let’s say $35,000 — then the Bronze plan will cost me $14,200 total and the Silver will cost me $16,000.

So if I want insurance to protect against the high end risk that concerns me, then it’s a no-brainer: Bronze wins out every time. The issue isn’t the deductible - it’s the maximum out-of-pocket.

The big savings for Silver come for people who qualify for the cost sharing reductions, but I’m not in that category.

The Silver would save me money if my aggregate medical expenses fell within the range of $5000-$15,000 — at that level the lower deductibles and copays with a Silver would pay off and could potentially save me up to about $800 — but that puts me in the position of paying $1800 in excess premiums in the hope of possibly getting that $800 benefit. That’s more than a 2:1 ratio between the cost I am paying in higher premiums and the potential benefit I can gain from it.

To me, that seems insane — especially when you factor in the 25% marginal federal tax rate. My $4300 HSA deposit is an automatic $1,075 reduction in federal taxes, just by virtue of the AGI deduction - which is more than I could possibly save with a Silver plan.

And that’s without considering the possible additional $5000+ I will save with a premium assistance tax credit if that $4300 HSA deduction pushes my AGI under the ~$46,000 cutoff. (And that issue will probably affect many people whose AGI fluctuates around $45K — we need to hang onto every deduction we can)

I assume that the math will be different depending on individual circumstances, premium rates, and the options that people are considering. But the point is that it makes no economic sense whatsoever for me to incur the very certain cost of higher premiums in order to protect against the very unlikely circumstances that I will incur expenses falling into the very narrow range where I could manage to save a few hundred dollars on out-of-pocket medical costs.

And again: Blue Shield won’t pay for my periodontist or the chiropractor in any case.

I’m looking at the big picture, factoring in my overall expenses and tax liability.

I guess I’m surprised that you are even willing to pay a premium for a bronze plan instead of the 1% Shared Responsibility Payment. You’d need an income of more than $170,000 to pay a penalty larger than the maximum benefit of your HSA contribution. But I suppose that your hedge against one bad health year, too.

I find your comment inexplicable. I’m not buying insurance to protect against that possibility that I might have $2000 or $6000 of expenses — I’m worried about 5 and 6 figure hospital bills. The premium for Bronze is roughly $14K annually; Silver is roughly $16K annually, and out-of-pocket max for each is about $6500.

I mean, your logic seems akin to the issue of whether or not I purchase extra insurance coverage for emergency road service or collision to repair or replace my 12-year-old car. Those are options I can live without, but I still need the liability coverage.

Again, do the math: I don’t know what your broken ankle would cost at 20% of surgery + hospital + $250 for the emergency room, and a $45 copay every time you see the physical therapist for 8 weeks. It’s hard for me to see how the hospital + surgery bill would run less than $15K, which is a $3000 charge on the Silver plan right there. I suppose it is possible that all of that is still less than the $6350 out of pocket that I might incur with the Bronze before my insurance starts paying 100%…. but I’m willing to take that risk.

Again, if I incur some sort of injury or illness in 2014 that requires long-term treatment — let’s say I get diagnosed with something that requires a monthly specialist’s visit ($65 copay on Silver) and medications that cost $3500 per month ($50 copay on Silver for brand-name drugs) — with ACA that means I’ll hit my max in 2014 and have the option to sign up for Silver or Gold in 2015. But I’ll do the math first - and I certainly would factor in the added premium costs.

I have to agree with Freelancer’s sentiments.

I am not an “invincible” and HSA plans make a lot more sense to me than the silver plans. If used judiciously as an IRA, the HSA feature is worth $1k to $2k in tax savings alone. Add the premium reduction if you are getting a subsidy due to AGI adjustment, that could be another $500-$700. As Freelancer mentioned, combined with the security and peace of mind of out of pocket maximum cap, for most people it is way better than frittering money away in premiums in the silver plan.

I understand that most corporate plans have spoiled the consumers in keeping a very low deductible and hence shielding the consumer from the pain of healthcare cost. Shielding the pain is never good. To give an extreme example, people lose their pain sensation in their extremities because of some ailment, end up losing their extremities completely.

But that’s never been the case in Individual insurance.. so in many cases ACA is an improvement.

Just repeatedly dumping on ACA in this forum is not constructive. It is here to stay and is a reality. People here are looking for constructive advice given the new reality.

Freelancer …

Ah, yes, my statement was sure to touch a nerve or two of the “invincibles.” But that’s the tradeoff between the premiums and peace of mind in the world of insurance. I don’t like paying as much as I do for auto and homeowner’s either, but I pay nevertheless because I don’t like the alternatives. I haven’t had a significant claim under either type of policy in my 61 years. That’s pure luck.

But you are also 55+, and are getting to that point in life when your “lifetime medical expenses” will eventually begin to catch up with you — statistically, most Americans incur about 80% of our lifetime medical expenses in the last five years of our lives.

And even I haven’t had much in the way of those expenses in my 61 years. I was almost 55, however, when I broke my ankle, needed surgery and one night’s hospitalization, followed by about two months of physical therapy after 8 weeks in a cast. I was glad to have health insurance that covered all my expenses other than copays. Because of that, I never came close the $7500 out-of-pocket limit in 2007. Before that, four days in the hospital for gall bladder surgery … exactly 21 years ago today (and just prior to the “Hillarycare” fiasco of 1993), and a couple of minor fractures (in 1963 and 1977). So I know my remaining “healthy” days are probably numbered.

Thanks to the PPACA, however, the choice of HSA-compatible plans, which was fairly extensive in 2009 prior to passage of the Act, is now limited to the bronze tier on the exchange, and that’s unfortunate indeed.

I guess I’m surprised that you are even willing to pay a premium for a bronze plan instead of the 1% Shared Responsibility Payment. You’d need an income of more than $170,000 to pay a penalty larger than the maximum benefit of your HSA contribution. But I suppose that your hedge against one bad health year, too.

It’s also unfortunate that the government considers those willing to contribute to an HSA as “wealthy” and limits your contribution to just $4300 in 2014. Had HSAs been available 20 years ago, when I thought I was invincible, I probably would have been more inclined to fund one, too.

Your maximum HSA contribution will only buy you, at most, a $1703 tax reduction now and the slight advantage of being able to use the $4300-plus-interest tax-free in later years to pay for medical expenses. But if you end up using those dollars as income instead, and have to pay taxes (which, thanks to the PPACA, will be substantially higher in the future) on the money, however, the $4300 could grow to a larger amount in your SEP retirement account, potentially offsetting the income tax due on withdrawal.

As for dental expenses, you or anyone else over age 25 can purchase the “Dental HMO” plans, with $0 deductible and unlimited annual benefits for covered services for about $8-$17 per month everywhere in CA — less costly than exchange-based PPO plans with limited maximum benefits.

The Dental HMO networks are smaller than the PPO networks, but the benefit limitations under the PPO plans are severe in my opinion, and if you have significant dental expenses, the DHMOs represent a very good value. And you can still use your HSA money to pay for dental expenses.

As for chiropractic coverage … well, thanks to the ACA, that will only be found in some group plans, at least until 2017, when it could be considered a “cadillac” benefit, too, and may end up on the cutting room floor.

Honestly, a bronze plan is in no one’s best interest ….

Except for those of us who typically incur nothing beyond routine preventive care in a year, and are older and facing very large premiums.

I have not come anywhere near meeting a deductible in 25 years. I am also self-employed and am unlikely to qualify for subsidies, unless I am able to maximize all possible deductions to reduce my AGI, including the HSA deduction — and in California, the only available HSA plans are Bronze. So I’m not just looking at the difference between the premiums for Bronze and Silver- it’s possibly the difference between a subsidized premium of $230/month (Bronze) and $805/month (Silver) - that’s an annual difference in premium costs that actually exceeds the out-of-pocket maximum.

Even if I can’t qualify for a subsidy, I’m still looking at Silver premiums that are more than $1800/year more expensive than the cost for the Bronze HSA. So it would cost me $1800+ out of pocket in order to get a plan with a $2000 deductible (vs. $4500) that I am unlikely to meet in any case.

However, even though I rarely need to see a medical doctor, I do have fairly high dental expenses and I regularly see a chiropractor — neither of which would be covered with a Silver plan. The Bronze doesn’t cover those expenses either, but those can be paid with my HSA dollars. I’m well over age 55, so rather than paying extra in premium dollars I probably won’t use, I can put $4300 into an HSA, get a AGI-reducing tax deduction, and use those funds to pay directly for the services that I expect to use.

Obviously each person’s situation is different, but a blanket statement that a particular plan is “in no one’s best interest” is naive at best — it ignores all of us people who don’t have chronic health problems but are facing very high premiums for the higher metal levels. We really do better to look at our own financial situations and health care needs and make decisions accordingly.

One advantage of ACA is that if I were to be diagnosed with a costly, chronic condition in 2014, I would have the option to switch to a Silver or Gold plan for 2015. Obviously the equation would shift if I had a known medical condition requiring regular medical care, or reliance on costly prescription drugs.

Krish …

The HSA plans, by law, are Bronze plans. But the non-HSA bronze plans cannot be merged with the HSA bronze plans as you suggest.

The bronze plans will most likely be similar, but may not be precisely the same due to regional differences in the cost of health care. Bronze plans are required to meet 60% “actuarial value” which simply means that a person with “typical” medical needs will have about 60% of the cost of those needs met by insurance.

This is not to say that everyone with a bronze plan will experience this at all. With a $5000 deductible, a person who has $4999 in health care expenses will have exactly $0 paid by insurance.

By the same token, paying a bit more for a silver plan reduces the deductible to just $2000, and if a person with a silver plan reaches the $6350 out-of-pocket limit, compared to a person with a bronze plan reaching the same limit, the insurance company will have paid a significant portion of the health care expenses between $2000 and $6350, and perhaps provide even more than 70% actuarial value.

By paying a bit more premium to obtain a gold plan eliminates the deductible entirely, which makes it more likely that the gold plan will deliver its 80% actuarial value. A gold plan can be as little as $100 more per month than a bronze plan for some individuals.

Paying $1200 in added annual premium has the net effect of eliminating up to $3800 of added out-of-pocket expense — a very reasonable trade-off for the person who can afford to do that.

The added premium for a platinum plan reduces the out-of-pocket maximum to just $4000, and will not cost an extra $2350 compared to a gold pan premium.

This is the most confusing aspect of the four metal tiers. When people look only at premiums, and fail to compare benefits and out-of-pocket costs, they generally make the wrong decision. That ends up being a 12-month mistake.

I see that all the Bronze plan in covered CA have the first three office visits (everything but specialist visits and ER visits) on a fixed co-pay without deductible, just as Phil had explained.

My question is, is this just a quirk in CC, or all Bronze plans by definition supposed to work like this — across the country?

If some one is looking for a high-deductible plan, this gives a bit more cushion for some minor illnesses like the flu etc.

It would be nice if they relax the requirement for HSA compatible plans and merge the bronze and HSA plans, so that the 60% actuarial value plans are automatically HDHP plans.

But that would be asking for too much common sense.

It is not “primary” care that is not subject to a copay, it is “preventive care” that is not subject to a copay. As Phil has said, there is no copay for the first three non-preventive care visits.

Honestly, a bronze plan is in no one’s best interest other than avoiding the Shared Responsibilty Payment and medical expenses in excess of $6350. The additional cost for a silver or gold plan can actually save more money in out of pocket expenses than the added premium in many situations, particularly those for persons who will have significant health care expenses but may not reach the out of pocket maximums.

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