Catastrophic Health Insurance: Who is it Best For?.
Catastrophic Health Insurance: If you are unable to afford health insurance through your employer or The Health Insurance Exchange, you may be able to purchase a basic health plan that includes essential health benefits for unforeseen illnesses or injuries. It is designed to protect you for a catastrophic health incident from high out – of-pocket costs.
These plans are available with a lower premium and a higher deductible in general.
Here is a summary of works including catastrophic coverage, including benefits, costs, and whether this form of policy will work for you.
Catastrophic Health Insurance
Under the Affordable Care Act, catastrophic health insurance is a form of medical coverage. This is a type of highly deductible health plan for people under the age of 30 or those who qualify for a “hardship exemption.”
Catastrophic plans are designed to protect you in the worst-case scenario; for example, if you get into a medical emergency and the total cost of your medicine is thousands of dollars. Monthly insurance premiums tend to be lower, but you will typically have to pay out of pocket for all health care costs before you meet the annual deductible of the program, which is usually at least a few thousand dollars.
What is covered?
A catastrophic insurance plan covers:
Essential health benefits: ambulatory patient services, emergency services, pregnancy and maternity/newborn care, mental health/substance abuse, prescription drugs, rehabilitative services, laboratory services, preventive/wellness services, pediatric services.
Additional benefits: birth control and breastfeeding coverage
Some plans may offer dental or vision coverage based on your state’s requirements for minimum coverage.
Preventive services: Shots, immunizations, screening tests including cancer/mammography. Screenings for women every 1 to 2 years for women over 40.
Three primary care visits per year before you’ve met your deductible
The availability of catastrophic health insurance plans varies by insurance company and by state.
Who is Catastrophic Health Insurance Ideal For?
Those Under 30 or Those Who Are Eligible for the Hardship Exemption of the ACA
Not everyone has access to catastrophic health coverage. You can only purchase catastrophic health coverage if you are under the age of 30, or if the ACA provision is excluded from hardship.
There are exceptions if premiums take up too much of your income or if you suffer other challenges, such as becoming homeless or suffering domestic violence.
Those Who Aren’t Eligible for Medicaid
If you can qualify for Medicaid, you’re better off than having catastrophic health insurance because Medicaid can provide you with additional coverage with no or low monthly income-dependent premiums.
Those Eligible for Subsidies to Buy an ACA Plan
Many people are also eligible to purchase an ACA plan that provides more coverage than a catastrophic health plan. Since subsidies can not be used for catastrophic plans, it could cost less if you qualify for the more comprehensive plan.
Those Who Would Be Uninsured Without It
If you are not eligible for Medicaid and even with ACA subsidies more comprehensive plans are still too expensive, buying a catastrophic health insurance plan can make much sense to you. It is definitely better than being uninsured, which could result in financial ruin if you become sick or seriously injured.
Pros of Catastrophic Health Insurance
Catastrophic health insurance plans have some definite advantages:
Premiums are typically much lower than for other types of health insurance.
Your coverage provides a financial safety net to protect you from devastating loss.
If you’re relatively healthy and use little medical services, you may pay less overall for insurance and care.
Consider your health status when deciding if a catastrophic plan is the right choice. If you’re pretty healthy, a catastrophic plan can be a great option, especially if you have an emergency fund available to cover care you need up to the cost of your deductible.
Cons of Catastrophic Health Insurance
Unfortunately, there are also big downsides to catastrophic health insurance plans:
Your medical coverage will have limited utility since you’ll only get coverage for preventative care, a few primary care visits, and very expensive care.
Your deductible is very high, so you’ll need to come up with a lot of money if you need healthcare services. This creates a big risk.
You can’t qualify for ACA subsidies to help pay premiums.
You cannot have a health savings account (HSA) like you can with other qualifying high deductible health plans. An HSA allows you to put away pre-tax funds to pay for healthcare.
If you’re going to have a baby or otherwise anticipate needing lots of medical care during the year, a catastrophic plan isn’t the right choice for you.
Catastrophic insurance plans are a unique type of policy tailored for healthy people who want limited coverage to pay minimal premiums. Although these plans protect you against catastrophic loss, if you choose one, you will have to pay yourself for much of your medical care.
Be sure to consider your health status, budget, and all available insurance options before deciding if a catastrophic plan is right for you.