Critical illness insurance and a high deductible in Utah: two examples

If your health plan has a high deductible, a serious diagnosis can cost you thousands of dollars before the plan pays much at all. Then comes coinsurance, until you reach the plan’s out-of-pocket maximum. Meanwhile the rest of life keeps billing you: rent, groceries, the days you can’t work.

A critical illness plan pays a lump sum when you’re diagnosed with a covered illness. It pays regardless of what your other insurance pays, and the money is yours. You can put it toward the deductible, the coinsurance and everything else.

Here are two examples from Utah, using CriticalGuard, a critical illness plan underwritten and administered by Golden Rule Insurance Company, a UnitedHealthcare company. The people, their health plans and their bills are fictional. The plan facts come from the carrier’s brochure, including its section on Utah, which changes more than most.

A quick guide to the plan

CriticalGuard has four plans: Cancer, Heart/Stroke, Cancer + Heart/Stroke, and the full-suite Critical Illness plan, which adds other critical conditions. You pick a plan and a Benefit Lifetime Maximum Amount, in $5,000 steps. That’s the most the plan will pay in a lifetime for one category of Qualifying Events. Plans with several categories give each one its own maximum. Benefits are per covered person.

Each Qualifying Event pays a share of the maximum:

• Cancer: life-threatening cancer 100%, cancer in situ 25%, benign brain tumor 25%, skin cancer $500.
• Heart/Stroke: heart attack 100%, stroke 100%, heart illness 25%.
• Critical Conditions (full suite only): Advanced Alzheimer’s Disease, ALS, coma lasting at least 7 consecutive days, end stage renal failure and major organ transplant at 100% each, and loss of independent living at 50%.

Every plan has a 30-day waiting period after the plan effective date. Benefits are a stated amount, paid regardless of the actual expense. You claim with a form from the UHC Member Hub, and the money is paid directly to you.

The brochure is plain about what CriticalGuard is not. It’s a supplement to health insurance, not a substitute, and it isn’t the Minimum Essential Coverage required by the Affordable Care Act. Both households below kept their health plans.

Dale in Park City: a heart attack while teaching

Dale has taught skiing at a resort near Park City for 16 winters. In summer he builds and repairs trails for a contractor. Neither job comes with health insurance, so he buys his own. His plan has an $8,000 deductible, then coinsurance up to an out-of-pocket maximum of $9,500 a year. The deductible starts over each January.

What he chose

His father and his uncle both had heart attacks in their 50s. So at 52, Dale chose the Heart/Stroke plan. At issue ages 50 to 64, its maximum runs from $10,000 to $100,000, and $10,000 is guaranteed issue. Dale wanted more than that. He chose $30,000 and answered the medical questions that come with it. He added no riders.

Why Utah mattered for Dale

The brochure’s general exclusions, for plans with Heart/Stroke coverage, include Qualifying Events connected to certain activities when you’re paid to take part or to instruct. Skiing is on that list. So is horseback riding, rock or mountain climbing, and racing a non-motorized vehicle. A second list, which doesn’t depend on pay, includes skydiving, rodeo sports and professional sports.

Utah’s entry in the brochure’s State Variations section says both lists do not apply in Utah. For a man who earns part of his living on skis, that line was the reason the plan made sense.

What happened

In February, at 54, Dale felt a heavy pressure in his chest on a chairlift halfway through a morning lesson. Ski patrol brought him down the mountain, and an ambulance took him to the hospital. Doctors confirmed a heart attack and placed a stent. He was told he was done for the season.

His health plan paid the hospital and his doctors under its own rules. Dale paid his $8,000 deductible and $1,500 of coinsurance, reaching his $9,500 maximum in his first week of care.

The arithmetic

He sent the claim form within the 30 days the brochure asks for after the First Diagnosis.

• Dale’s Heart/Stroke Benefit Lifetime Maximum Amount: $30,000
• Share for a heart attack: 100%
• $30,000 × 100% = $30,000

The plan paid Dale $30,000 in one lump sum. It paid regardless of his health plan, and regardless of what his bills added up to.

Where the money went

• $9,500 for his out-of-pocket maximum: the $8,000 deductible and $1,500 of coinsurance
• $10,500 for three months of rent, his truck payment and groceries, at $3,500 a month, while he couldn’t teach
• $1,000 for rides and parking during cardiac rehab, when he wasn’t yet cleared to drive
• $9,000 set aside for next year, when his deductible would start over and his follow-up care would continue

That adds up to $30,000.

What the plan didn’t pay, or wouldn’t have

His Heart/Stroke category is used up. A heart attack pays 100% of the maximum. If Dale had a stroke later, this plan would pay nothing more for it.

It doesn’t cover cancer. The Heart/Stroke plan pays for heart and stroke Qualifying Events only.

Other exclusions still apply in Utah. Among them: a diagnosis made outside the United States, a diagnosis made by you or a member of your immediate family or household, and a diagnosis made before your effective date.

Timing mattered. His heart attack came two years in, well past the waiting period and the preexisting conditions limitation described below.

Mateo and Kira in Ogden: a diagnosis during pregnancy

Mateo is 31 and works as an HVAC technician for a small company in Ogden. Kira, 29, works part-time at a public library. They have two children, ages 4 and 2. Their family health plan comes through Mateo’s job. Each person has a $5,500 deductible, then coinsurance up to $8,500 a year. The deductible starts over every January.

What they chose

They wanted the widest coverage and a benefit amount they could afford. At issue ages 18 to 49, the Cancer, Heart/Stroke and Cancer + Heart/Stroke plans start at $50,000. The full-suite Critical Illness plan starts at $5,000, and $5,000 and $10,000 are guaranteed issue. They chose the full suite at $20,000, which meant answering some medical questions. The plan covers all four of them, and each covered person has their own maximum in each of the three categories.

Like every CriticalGuard plan, it also includes a $10,000 COVID benefit for confinement to an intensive care unit with a positive COVID diagnosis, once per person per lifetime, and a pregnancy benefit. The brochure says neither one counts against the Benefit Lifetime Maximum Amount.

What happened

Their plan took effect on January 1. In April, Kira learned she was pregnant. At her first prenatal visit in May, her Pap test came back abnormal. A closer exam and a biopsy followed in July, and on July 22 her doctor told her she had cervical cancer in situ. Her doctor planned to watch it through the pregnancy and treat it after the baby came.

Why Utah mattered for Kira

Under the brochure’s general rule, CriticalGuard’s preexisting conditions limitation looks back 12 months before your effective date and lasts up to 12 months after it. Utah’s entry shortens both to 6 months. Kira’s limitation ended on July 1. Her diagnosis came three weeks later.

Nothing in her history would have counted anyway. Her last Pap test had been normal, three years before. But the shorter Utah window meant that by July, the question was already closed.

The arithmetic

The pregnancy benefit pays an additional 50% of the Qualifying Event benefit when the First Diagnosis comes during a covered person’s pregnancy.

• Kira’s Cancer Benefit Lifetime Maximum Amount: $20,000
• Share for cancer in situ: 25%
• $20,000 × 25% = $5,000
• Pregnancy benefit: 50% × $5,000 = $2,500
• Total paid: $5,000 + $2,500 = $7,500

Because the pregnancy benefit isn’t subject to the maximum, only the $5,000 counts against Kira’s Cancer category: $20,000 − $5,000 = $15,000 still available. Her Heart/Stroke and Critical Conditions categories are untouched at $20,000 each. So are Mateo’s and the children’s.

Where the money went

Their daughter was born in December. By then, prenatal care and the delivery had used Kira’s whole $5,500 deductible for the year. In February, she had the procedure to remove the abnormal tissue, and it landed on a brand-new deductible.

• $5,500 for Kira’s first-year deductible, met by her pregnancy and delivery
• $2,000 toward her new deductible in February, for the procedure

That adds up to $7,500. It didn’t cover all of the second year’s costs, but it covered her first deductible in full and the first $2,000 of the next one.

What the plan didn’t pay, or wouldn’t have

Pregnancy itself isn’t a Qualifying Event. The plan paid nothing toward prenatal care or the birth. Their health plan did that, after the deductible.

Cancer in situ pays once. It’s limited to one benefit per person, per lifetime. A later life-threatening cancer could pay up to the $15,000 left in Kira’s Cancer category.

A new baby. The brochure lists a natural child among eligible children. The policy sets out how and when a newborn is added.

What’s different in Utah

Utah’s entry in the State Variations section changes several things. The ones most readers will care about:

• Activity exclusions. The exclusions for professional sports, skydiving, rodeo sports and similar activities, and for being paid to ski, ride horses, climb or race, do not apply.
• Preexisting conditions. The look-back and the limitation are each 6 months instead of 12.
• First Diagnosis. The general definition says a diagnosis that occurs for the first time in the covered person’s lifetime. Utah’s version leaves out “in the covered person’s lifetime.” If you’ve had a covered condition before, read the policy wording closely.
• Premium changes. You’ll get at least 45 days’ notice of any change, instead of the general 31. Premiums won’t change solely because of a claim or a change in your health.
• Free look. You have 30 days to return the policy for a refund of the premium you paid, instead of the general 10.

Utah’s entry also says the exclusion for a Qualifying Event caused by AIDS or an AIDS-related condition does not apply, and it narrows the exclusions for intoxication, felonies and riots. The 30-day waiting period is unchanged.

Matching a benefit amount to your deductible

Dale and Kira chose very different amounts, and both were sized against something real.

Write down your own numbers. Your deductible, your out-of-pocket maximum, and whether your deductible starts over each year. A diagnosis late in the year, or treatment that runs past New Year’s, can mean two deductibles. Kira’s did.

Add a few months of the costs that keep coming. Dale’s rent and truck payment were a bigger number than his coinsurance.

Remember that some events pay a share. Cancer in situ, a benign brain tumor and heart illness pay 25% of the maximum. Loss of independent living pays 50%. On a $20,000 maximum, a 25% event pays $5,000. If you want a 25% event to cover your deductible, the maximum has to be about four times the deductible.

Check your age range. For the Cancer, Heart/Stroke and Cancer + Heart/Stroke plans, the maximum runs from $50,000 to $100,000 at issue ages 18 to 49, $10,000 to $100,000 at 50 to 64, $5,000 to $75,000 at 65 to 74, and $5,000 to $50,000 at 75 to 90. The full suite starts at $5,000 at every age. Some smaller amounts are guaranteed issue, depending on age and plan. That means no medical questions, but the preexisting conditions limitation still applies.

Think about riders at the start. The Wellness, Outpatient Prescription Drug and Telemedicine riders cost extra and can only be added when you apply.

The short version

• A high deductible means a serious diagnosis can cost you thousands before your health plan pays much. CriticalGuard pays a lump sum on a covered diagnosis, directly to you, whatever your health plan pays.
• Dale’s $30,000 covered his out-of-pocket maximum, three months of bills and part of next year. Utah’s entry meant the exclusion for paid skiing didn’t apply to him.
• Kira’s $7,500, including the pregnancy benefit, covered one deductible and part of the next, which came about two months apart. Utah’s 6-month preexisting conditions window had already closed.
• The plan pays only for the Qualifying Events it lists, after a 30-day waiting period, and some events pay once per lifetime.
• In Utah you get a 30-day free look and at least 45 days’ notice of a premium change.
• CriticalGuard is a supplement, not health insurance, and not Minimum Essential Coverage.

These are fictional examples. The policy sets the full terms, and actual benefits, underwriting rules and availability depend on carrier guidelines and state regulations.