The Definition of Cadillac Health Insurance Plans

Cadillac health plans are a type of health plan that provides a broad range of coverage options. This type of health insurance plan is called a "Cadillac" plan because of its high cost and all of the top-of-the-line health care coverage that comes with it.

Function

• The purpose of the Cadillac health-insurance plan is to provide customers with comprehensive coverage. It is typically purchased by wealthy individuals. This kind of coverage is also sometimes purchased by employers as a benefit to their employees. With this type of insurance, little out-of-pocket expense is required from the user.

Cost

• Cadillac health insurance plans are more expensive than other types of health insurance. An individual Cadillac health insurance plan costs more than $8,000 per year in premiums. A family would have to pay $21,000 or more to have a Cadillac health insurance plan. This figure does not count any deductible paid by the insured.

Taxes

• Cadillac health insurance plans came into focus in the recent health-care reform debate. The result it that these plans will now be taxed significantly. The insurance company will have to pay a 40 percent tax on the premiums. This is to discourage use of these plans, which critics say contributes to overusing the health-care system.

Features

• Cadillac health insurance plans come with many features that you will not find with a traditional health insurance plan. For example, many do not have any type of deductible or co-pay. You may also receive vision and dental benefits.The plan may not have any coverage limits or pre-approval step for getting care.

Considerations

• While these plans are more expensive than what many individuals can afford, some companies have come under scrutiny for providing them to upper-level executives. With this type of plan, there is no incentive for a policyholder to avoid treatment.