About My Health Careers Internship MedBlogs Contact us
Medindia LOGIN REGISTER
Advertisement

'Cadillac' Insurance Plans Explained

by VR Sreeraman on September 22, 2009 at 12:40 PM
Font : A-A+

 'Cadillac' Insurance Plans Explained

A "Cadillac" or "gold-plated" insurance plan is expensive coverage, usually defined by the total cost of premiums, rather than what it might cost the patient to get health care.

People who have Cadillac plans often have low deductibles and excellent benefits that cover even the most expensive treatments, but this is not always the case. Premium costs can be high for reasons other than generous benefits, including the age, gender and health status of the customer. In an employer-based plan, premiums are based on the pooled risk of employees and may be higher if many of the employees are sick, older, predominantly female or live in a region with expensive health costs. Such people may be paying Cadillac rates for clunker coverage.

Advertisement

How many people have high-premium plans?

Lawmakers are still grappling with what premium price is considered "gold-plated." The legislative outline proposed by Sen. Max Baucus, D-Mont., chairman of the Finance Committee, sets the threshold at $8,000 in premiums for an individual and $21,000 for a family. It is estimated that between 2 and 3 percent of covered workers and families would hit that threshold today.
Advertisement

This year, the total cost of the average family policy offered by employers was $13,375 according to the Kaiser Family Foundation.

Although news accounts have frequently described Cadillac coverage as plans catering to Wall Street titans, with annual premiums of $40,000, not everyone with high-cost coverage is very wealthy or even especially well off.

Some union workers and employees of businesses with a preponderance of older or sicker workers may also have premiums in the Cadillac range.

How will the health overhaul proposals affect people with Cadillac plans?

The Baucus proposal would tax insurers for policies with premiums above the thresholds. The goal of the provision is twofold: to generate revenue to help pay for covering the uninsured; and to make the most expensive plans - which some argue encourage overuse of medical care - less attractive. The thresholds would increase as the nation's overall rate of inflation goes up. But since health insurance costs increase much faster than inflation, more plans could end up being taxed as time goes on, if nothing else changes.

Although the tax is supposed to be imposed on insurers, the effects are likely to trickle down to consumers. Insurers might tinker with benefits, for example, by increasing deductibles to reduce premium costs to below the threshold. In addition, more than half of employees with insurance work for companies that "self-insure," meaning the firms pay for their workers' health bills on their own. These employers would be required to pay the excise tax themselves and could pass the tax on to workers in the form of higher premiums or lower wages.

Employers paying Cadillac premiums because they have a sicker workforce may see costs go down since all of the proposals would prohibit insurers from charging higher rates based on health status

Source: Kaiser Health News
LIN
Advertisement

Advertisement
News A-Z
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
News Category
What's New on Medindia
Contraceptive Pills in Polycystic Ovary Syndrome (PCOS) Curtail Type 2 Diabetes Risk
Mushroom May Help Cut Down the Odds of Developing Depression
How to Battle Boredom during COVID
View all

Medindia Newsletters Subscribe to our Free Newsletters!
Terms & Conditions and Privacy Policy.

More News on:
Star Health and Allied Insurance ICICI Lombard General Insurance Company Limited Health Insurance - Ombudsman Health Insurance - Basics New India Assurance Policies Awareness about Healthcare Insurance in India Premium Calculation by Health Insurance Companies Fraudulent Health Insurance Claims Key Procedures for Filing a Healthcare Insurance Claim Latest on The New India Assurance Company Ltd 

Recommended Reading
Health Insurance Plan
With a health insurance policy you and your family can rest assured!...
Health Insurance: Welcome Trends!
There's Good news for senior citizens! Private health insurance companies show keen interest to ......
Life Insurers in India to Launch Health Insurance Policies
The health insurance industry in India is booming and many key players are poised to launch ......
Awareness about Healthcare Insurance in India
A basic awareness about Indian health insurance for any layman for quick reference presented in a cr...
Fraudulent Health Insurance Claims
To educate the public regarding hazards of committing fraud in healthcare insurance claims and its i...
Health Insurance - Basics
Health insurance guarantees payments to a person in the event of sickness or injury.and works as pr...
Health Insurance - Ombudsman
Insurance Ombudsman institutions work for the purpose of quick disposal of the grievances of the ins...
ICICI Lombard General Insurance Company Limited
Major health care plans from the ICICI Lombard include complete health insurance ihealth plan, perso...
Key Procedures for Filing a Healthcare Insurance Claim
keep yourself well informed about the claim process and avoid frustration of your claim getting ......
New India Assurance Policies
The existing Mediclaim and Health Plus Medical expenses policies have been discontinued and Mediclai...
Premium Calculation by Health Insurance Companies
This article gives an insight as to how healthcare insurance policy premiums are collected by Insura...
Star Health and Allied Insurance
Star Health & Allied Insurance offers a convenient insurance for the corporate people when they tra...

Disclaimer - All information and content on this site are for information and educational purposes only. The information should not be used for either diagnosis or treatment or both for any health related problem or disease. Always seek the advice of a qualified physician for medical diagnosis and treatment. Full Disclaimer

© All Rights Reserved 1997 - 2021

This site uses cookies to deliver our services. By using our site, you acknowledge that you have read and understand our Cookie Policy, Privacy Policy, and our Terms of Use