Thursday, September 15, 2016

Do as we say, not as we do

Medical insurance is one of the most highly regulated products sold on the market today, even before Obamacare added a host of new rules. One of the rules for private medical insurance (to the best of my knowledge) is that all plans have an annual out of pocket limit. This means if your medical costs are very high there is still a limit to how much you pay for medical costs. This out of pocket limit varies from about $6000 to $14000 depending on single, married, dependents, and the type of policy. But regardless of the type of policy, they all have an out of pocket limit.

So if you are working and your employer provides health insurance, there is a limit to the amount of money you can pay for medical and prescription costs. Most people don't hit this limit (or come close), but it's there.

However, guess what happens when you hit 65 and switch to Medicare? Medicare Part B pays 80% of charges after a fairly low deductible. However, Medicare Part B (non-hospital medical care) has no out of pocket limit. Medicare Part D (prescriptions) switches you to "catastrophic coverage" once your drug costs are over the "coverage gap" (or donut hole). But apparently there's no out of pocket limit, Medicare's web site says you pay a "small" copayment or coinsurance amount.

So the government tells private insurers that they cannot require customers to pay more than a certain amount out of pocket each year, but the government's own insurance plan has no maximum.

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