Individual and Family
How to Know If Catastrophic Health Insurance Is Right for You
Published on May 02, 2018
Catastrophic health insurance is a high-deductible health insurance plan, meant for people under the age of thirty. Anyone above 30 who wishes to get catastrophic insurance will need to qualify for a “hardship exemption”.
Catastrophic health insurance is very similar to major medical health insurance (also known as Obamacare plans). It covers all the same basic benefits; the difference is that it’s mostly meant for people who only expect to have high medical expenses due to an unexpected event. This means that deductibles are extremely high, but constant costs, such as premiums, are more affordable in most cases.
You can learn more about deductibles here, but essentially, it is the cost you have to spend out of pocket on covered medical costs before insurance kicks in and starts sharing costs. Luckily, there is still room for preventative care with catastrophic health insurance. Even without meeting your deductible, the following will be covered by catastrophic insurance:
- Three primary care visits a year
- Free preventative services (required by the ACA), such as certain screenings and immunizations
Why consider catastrophic health insurance?
A catastrophic plan is a great way to still have coverage, but not pay the amount that most major medical plans cost. Some examples of reasons that catastrophic coverage might work for you:
- You’re looking for lower premiums, or cannot afford the cost of more expensive coverage
- You don’t need a lot of medical care, and rarely visit the doctor
- High out-of-pocket costs in the case of needing medical care outweighs expensive monthly premiums
- You have the money saved in the case of a serious medical issue (since you have to pay completely out-of-pocket before you meet your deductible)
- You don’t qualify for Medicaid
- You do not qualify for subsidies, or wish to forgo your right to subsidies you may have qualified for
Each plan has its own terms and limitations, so be sure to check the official plan documents to understand how that specific plan works. This article is only for general education.
Does catastrophic health insurance cover the ten essential benefits?
Catastrophic insurance plans do cover all 10 essential health benefits that all Obamacare plans are required to cover. If you want to see what the 10 essential benefits are included in qualified health plans (Obamacare plans), refer to the list below:
- Laboratory services
- Emergency services
- Prescription drugs
- Mental health & substance use disorders
- Maternity and newborn care
- Pediatric services, including vision and dental
- Rehabilitative services and devices
- Ambulatory patient services
- Preventative & wellness services and Chronic disease management
The difference with catastrophic insurance is that you will likely have to spend a lot more money out-of-pocket before cost sharing with your health insurance company begins. But, since the plan does cover these benefits, the money that you spend on these services will go towards the deductible. If a catastrophe happens, which causes you to have unexpected high medical costs, you may meet your deductible or out-of-pocket maximum.
Who would benefit from a catastrophic health insurance plan?
While there is no definitive answer to the question of what plan works best, it’s safe to say that catastrophic insurance is probably going to be best for people who don’t foresee having many medical costs through the year.
Since deductibles are higher with catastrophic health insurance plans, it means you’ll be paying completely out-of-pocket until you’ve met the high deductible. For someone who doesn’t plan on needing anything past the preventative care benefits that are paid for even before the deductible is met, a catastrophic plan makes sense.
Somebody who has many medical costs might benefit from a plan that starts cost sharing earlier on. Although plans with lower deductibles often have higher premiums, for some individuals, that higher monthly cost is worth it.
You’ll have to assess your personal health circumstances, do you research, and choose the plan that you feel offers you the right amount of coverage.