Using Your Catastrophic Cap Strategically
If you read our previous article about definition of terms, you understanding catastrophic cap. But we can tke this concept a bit further. Instead of thinking of it solely as a financial backstop to provide financial protection for your family, you actually can use it strategically to reduce your cost of care. I will illustrate through my personal experience in Thailand.
Do you understand Catastrophic Cap and what it means for you? It can be used for strategic benefit, once you know how it works. Your catastrophic cap is the most you will spend out-of-pocket in any given year. If you ever reach your cap, then further expenses are covered 100%, with no more copayments from you until January 1. The cap is calculated on a per-family basis; not per-person. Once a family reaches their cap, you will have no more cost-shares to pay for the rest of the year.
Some families reach the cap predictably each year if they have high recurring costs for chronic conditions. Some families never even come close; it is a distant & remote concept. That is usually true for my family; our normal out-of-pocket medical expenses are generally just a few hundred dollars per year.
For retirees living overseas who have 25% copayments for visiting non-network providers, the Cap is a real & tangible thing. In 2020, living in Thailand, I did something rather counter-intuitive; rather than trying to scrimp & save on health care, I made a conscious decision to try to reach our cap; this is not easy in Thailand where the cost of care is so low. I reasoned that if we could reach our cap, then we would essentially get "free" care for the rest of the year. We did this by piling lots of required care into a single calendar year.
Here are some of the things my family and I did early in 2020:
An overnight sleep study in Bangkok to renew my diagnosis of sleep apnea.
Got a high-end CPAP, since it had been five years since my last one.
Got an eye exam for possible cataracts, then a 2nd opinion when I had issues with the first result.
A series of mental health care visits, until COVID made it impossible.
Dermatology care for my wife and me for medically necessary care.
"Cadillac" health check-ups at Thailand’s best hospital.
In-patient hospitalization for a stomach infection.
Beyond that, we had the normal expenses like routine illnesses, well-child visits, vaccinations, etc.
By Thanksgiving, we'd reached our cap which was $3000 back then (it's around $4000 now in 2023 for retirees on Select.) At that point, after having confirmed my pre-cataract condition, I scheduled eye surgery in Pattaya Thailand. This took careful coordination due to restrictions of COVID, but we were able to get it done. This surgery easily would have cost $30,000 in the states for two eyes. My cost: $200. We had $0 copayments because we were at our cap; my only out-of-pocket expense was upgrading from the monofocal lens covered by TRICARE to a multi-focal lens which is NOT covered by TRICARE.
To be clear -- none of our care that year was frivolous. It was stuff long deferred & finally addressed. The difference was to do it all in one calendar year specifically to meet our cap. All told, the care we received improved our quality of life by addressing specific medical needs. I got the eye surgery in the week after Christmas. If I had missed the Dec 31 deadline, it would have cost me $2700 in copayments, so I saved a bundle by having it done that year.
One other thing I achieved in 2020 was to change my mindset. In earlier years, my approach was to use TRICARE as little as possible to save money and avoid the process of submitting claims which I only vaguely understood. Now, we embrace our benefits, using them as much as possible, to improve our family’s health. It’s even easier now that we have moved back to Hawaii because we have easy access to network providers and don't have to submit claims. Our copayments are very low for my wife & daughter, and $0 for me since I have transitioned to TFL/Medicare. The important thing is that we don't shy away from care anymore because we know how to do it, and what it will cost.
Do you understand your benefits? Are you embracing TRICARE or trying to avoid it? Do you see any chance of using the strategy that we used in 2020 -- reach your cap and load up on health care for the rest of the year? For most of us, this won't happen accidentally -- it's a strategic plan that you can purposely put into motion that may benefit your family.
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