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What is the “Cadillac Insurance” version of a Medicare Advantage plan?

By on May 23rd, 2012
Filed: Advice, Caregivers, Consumers, Disabled, Medicare, Medicare, Seniors

(Updating our series of FAQs on Medicare Advantage – Click ‘here‘ to see a full list of Q&A’s on Medicare Advantage)

We hear this question often: What is the “Cadillac Insurance” version of a Medicare Advantage plan? -There is no simple or correct answer. Medicare Supplement Insurance Plan F is typically referred to as the Cadillac plan of the Medicare Supplement space, but when it comes to Medicare Advantage there is no easy equivalence to make.

That’s because Medicare Supplement insurance plans are standardized in most states, so a Plan F must be the same no matter where you buy it, or who you buy it from. But, when it comes to Medicare Advantage plans, the benefits can be much more flexible.

However, the most important benefits for consideration include a combination of the following:

  1. The annual maximum out of pocket (MOOP): The highest MOOP for a Medicare Advantage plan is $6,700. But, plans can have MOOPs of much less than that. The lower the MOOP, the less you have to pay out of pocket in the event of an unexpected injury or illness.
  2. Prescription drug coverage: Most Medicare Advantage plans provide prescription drug coverage. A “Cadillac” Medicare Advantage would cover the highest percentage of available prescription drugs, including the specific drugs you take. You can use a prescription drug plan comparison tool, like the one we have online at PlanPrescriber.com, to compare plans and be certain you’re enrolling in a plan that covers the specific drugs you’re taking. Our tool will also let know which plan covers your prescription drugs at the lowest possible cost.
  3.  Provider networks: Medicare Advantage plans are typically set up as preferred provider organizations (PPOs), or healthcare management organizations (HMOs). In either case, the insurance company would have a list of providers – doctors, specialists and hospitals – that you would have access to as an enrollee on their plan. And, when you visit those providers you would presumably pay a lower price for care, or the insurance company would cover a higher percentage of the cost of that visit. Costs for care under a PPO may vary depending on wether care is received in or out of network. Plans with larger networks that include your doctors, specialists and hospitals would likely be viewed as Cadillac plans in your eyes.
  4. Star Ratings: Medicare Advantage plans have what are called “5 Star” quality ratings. These ratings are established by the Centers for Medicare and Medicaid Services (CMS) to help beneficiaries determine which plans provide better value. Plans that have 5-star ratings are considered to be the best.

 

What does Cadillac health insurance mean?

The term “Cadillac Insurance” or “gold-plated” health insurance typically refers to a high-cost health insurance policy. The Cadillac epitomizes the American-made luxury automobile, so luxurious health insurance plans have been tagged with the Cadillac moniker.

Cadillac plans are generally assumed to have high monthly premiums, but premiums 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. So, costs may be higher if many of the employees are sick, older, female or live in a region with expensive health costs.

In the Affordable Care Act (health care reform) a high-cost health plan is defined as a plan that costs more than $10,200 for an individual or $27,500 for a family, including employee and employer contributions to flexible spending accounts or health savings accounts. Starting in 2018, a tax will be imposed on Cadillac insurance plans.

Don’t panic, Medicare Advantage plans are not subject to the Cadillac insurance tax.

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Medicare has not reviewed or endorsed this information

About Ross Blair


Ross Blair has applied more than 26 years of technology experience to develop PlanPrescriber.com, a website that makes it easier for seniors and their caregivers to select and enroll in the best Medicare products for their specific needs. In his role as CEO, he has worked closely with pharmacists, insurers, physicians, caregivers and seniors to identify the most critical and complex aspects of Medicare and create a system that delivers this information to consumers in a format that is easy to use and understand.

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