Catastrophic Health Insurance is type of health insurance policy that assists with medical care costs in the event of a catastrophe or high cost treatment. It has higher deductibles and early on out-of-pocket costs or only supplements a primary insurance in the event of hospitalization, but they have much lower monthly premiums than other types of health insurance.
Types of Catastrophic Health Plans
There are two types of catastrophic health plans: supplemental and comprehensive. They both are intended to be used only in catastrophic events, but they name can be misleading. There are many surgeries and procedures each year which improve the lives of people every year and are not catastrophic in nature, but do cost significant amounts of money. Joint replacement surgeries, having a baby, or broken bones requiring surgery often cause people to reach their out-of-pocket maximums and these are the situations in which catastrophic plans are used.
Supplemental and Comprehensive Catastrophic plans are both intended for use only with high medical cost situations, but they function in different ways. Supplemental Catastrophic plans function similarly to other types of supplemental plans and are not used as the primary health insurance. Comprehensive Catastrophic plans are primary health insurance plans and they must meet Affordable Care Act guidelines, but cover only minimal essential benefits before the high deductible is paid.
Supplemental Catastrophic Health Insurance
Supplemental Catastrophic Health Plans are used to supplement an exiting lower deductible health insurance plan. Supplemental Catastrophic plans provide coverage for things that is usually not covered by a primary health insurance plan and often are only available if you have a hospital stay. In a catastrophic medical event requiring a hospital stay these plans may help with costs like transportation, lodging, child care, private rooms, and they may even help with deductible and copay costs. Supplemental Catastrophic Plans may be a beneficial for someone who is at risk for significant medical costs or hospital stays, like persons suffering form heart disease or diabetes.
Comprehensive Catastrophic Health Insurance
Comprehensive Catastrophic Health Insurance is usually the highest deductible health insurance, but it can’t be over the limits placed by the Affordable Care Act for out-of-pocket maximums. Typically, this means the deductible will be the same as the out-of-pocket maximum. All medical costs up to this amount is paid for out-of-pocket, other than the preventative services required by the Affordable Care Act at no out-of-pocket costs. There are exceptions to this generalization though, sometimes they will cover some emergency room care before deductible and sometimes the deductible amounts are high, but not at maximums.
The premiums for catastrophic plans are usually significantly lower than other types of health insurance, but they do not qualify for premium tax credits or cost assistance and it only qualifies as minimal essential coverage if you are under 30 or have a hardship exemption. It can only be purchased through the Marketplace if you meet those guidelines and can always be purchased directly from insurers or through insurance brokers.
This is a good type of health insurance for younger and healthier individuals whose incomes are higher. It might also be the right type of plan for someone who has limited access to health care facilities, like living in very rural communities, or for those who only intends to seek out medical care in the event of an emergency. In these types of situations the amount of money saved over time because of the lower premiums can be used to offset minor medical care costs or the cost of a healthier lifestyle, but it should also be used fund savings accounts. In the event of a catastrophic health condition with high medical costs for treatment, the out-of-pocket costs with catastrophic plans are very high. It is strongly recommended that people with catastrophic health insurance plans to also have a Health Savings Account (HSA). This allows you to save for those high deductible costs using tax free dollars.