A Cadillac insurance plan is one you may or may not have heard of in passing. Not too many people have this type of insurance policy, and those who do pay exorbitantly for it (although it seems we all pay exorbitantly for our health insurance policies these days). The name Cadillac derives from the luxury vehicle, always known as the most luxurious American car on the market.
The Cadillac insurance plan is expensive. It’s a top-dollar plan that only offers some of the best insurance benefits for a large percentage of policy holders. The term is simply used to describe plans that are unusually expensive in a world of already expensive policies. The term did not gain popularity until Bill Clinton proposed his Clinton Health Care Plan during his time in office in the early 90s, and it’s being used more frequently today.
What insurers want consumers to understand is the fact that purchasing a Cadillac plan does not mean the insured will receive high-end health care that exceeds the quality of care of others. Cadillac plans are more expensive, yes, but that doesn’t always make them better. The term is more often used to describe plans that are expensive due to other factors, such as costs in the medical industry.
Health care plans with small deductibles and no – or very small – co-pays are often criticized by the health care industry as driving up the cost of other health care plans for those who are privately insured. These Cadillac plans offer some of the least expensive out-of-pocket expenses for policyholders that include some of the most comprehensive and expensive medical treatments. As of 2018, those who carry health care plans above a particular threshold will be charged a 40 percent excise tax. The plan is being referred to as the Cadillac Tax.
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