Catastrophic Coverage

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Catastrophic Coverage

What is it?

Catastrophic Drug Coverage is designed to offer protection against large unforeseen medical expenses that often result from serious accidents or medical emergencies.

Who should consider it?

Catastrophic coverage is ideal for people who currently have group or individual health coverage, but are looking for protection from an unforeseen, serious accident or medical emergency. People without health coverage will also find Catastrophic coverage an excellent way to protect themselves from large, unplanned medical expenses.

Why you should buy it?

If you have a personal health insurance plan, your drug coverage is probably limited to either $5,000 or $10,000 annually. You may work for an employer who provides group insurance but with a similar drug limit restriction. This is not uncommon these days since employers are looking for ways to reduce their benefit costs and, at the same time, protect the integrity of their group insurance plan well into the future.

This coverage provides the following benefits:

  • Unlimited 100% coverage for generic and name brand prescription drugs when annual claims exceed $4,500 per anniversary year.
  • Additional $25,000 in coverage for Homecare and Nursing, Durable Medical Equipment (wheelchairs, etc.) and Prosthetic Appliances when annual claims exceed $7,500 per anniversary year; lifetime maximum of $100,000.
  • In the event of an accident that requires a hospital stay of at least 24 hours, Catastrophic coverage provides unlimited Chiropractor and Physiotherapist coverage, for one year following an accident.
  • All benefits are paid at the reasonable and customary level and are coordinated with any other health plan coverage you may have.

Sample Monthly Premiums:

  • 2 Adults, each age 40, with two children  – $52.00
  • 2 Adults, each age 50, with no children    – $34.00
  • 2 Adults, each age 60, with no children    – $39.20

Common definitions

  • Anniversary Year means the consecutive 12 months following the Effective Date of the Agreement, and each 12-month period thereafter.
  • Benefit Year means the 12 consecutive months following the incurred date of the claim.
  • Calendar Year means the 12-consecutive-month period commencing January 1, ending December 31.

How do specialty drugs impact your Drug Benefit Cost?

Today, Specialty Drugs represent less than 1% of claims but over 20% of total drug expenditure. This class of drugs is the fastest-growth segment for most drug plan sponsors. It is projected that Specialty Drugs will represent 50% of the total drug expenditure by 2020.

What are the most commonly prescribed Specialty Drugs?

Indication Drugs Expected Annual Cost
Inflammatory Diseases Remicade®
$21,000 – $40,000
Antiviral – Hepatitis C Sovaldi®
$60,000 – $120,000
Autoimmune – Multiple Sclerosis Copaxone®
$17,000 – $50,000
Cancer Gleevec®
$20,000 – $60,000

Specialty Drugs for Rare Disorders:

The incidence of rare diseases may be higher than previously thought. According to the Canadian Organization for Rare Disorders, each rare disorder may only affect a small number of people, but there are over 7,000 known rare diseases and dozens more are being discovered each year.

Below is a sampling of the annual specialty drug cost, associated with rare diseases.

Condition Drug Expected Annual Cost
Multiple Myeloma Revlimid® $100,000 +
Metastatic Melanoma Cotellic® $100,000 +
Phenylketonuria Kuvan® $50,000 – $200,000
Paroxysmal Nocturnal Hemoglobinuria
Hemolytic Uremic Syndrome
Soliris® $186,000 – $750,000
Cystic Fibrosis (specific gene mutation) Kalydeco® $323,000

Rare Diseases in Canada:

  • 1 in 12 Canadians will be affected by a rare disorder.
  • 3 million Canadians face a debilitating disease that severely impacts their life.
  • The cost associated with the treatment of rare disorders can exceed $200,000 annually.

The Formula for a Sustainable Drug Program:

There is no simple solution. Today’s action plan needs to revolve around an integrated approach by implementing programs that impact four important key areas or stakeholders. With the exception of delisting the Specialty Drugs, none of these strategies will deliver significant savings in isolation. Employers need to leverage as many tools as possible to reduce drug costs and lessen the financial impact of Specialty Drugs in a meaningful way.

To hear more about the formula for a sustainable drug program and the positive impact this could have on your group insurance plan, call us today for a free consultation.