Catastrophic Health Insurance Plans, Benefits, And Downsides

by Mouli Chakraborty
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 Nobody knows when any health emergency arrives; for this reason, individuals opt for health insurance plans. But hefty paying premiums for an insurance plan at a tender age is like a juxtaposition that no one would agree with. That is where the catastrophic health insurance plans come to play. 

Agreeing to catastrophic insurance would require a lower periodical premium with coverage of all kinds of health benefits. Is this Catastrophic insurance for everyone? If not, who is exempt from their plans, what are its risks, etc.? Learn from us. 

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What is Catastrophic Health Insurance? 

What is Catastrophic Health Insurance
What is Catastrophic Health Insurance

Those who consider insurance plans a mere adult thing really should know about Catastrophic health plans. By applying for catastrophic health insurance, all those who are young and don’t require much health care have to pay lower monthly premiums.

This inexpensive premium insurance plan does come with a high deductible amount. The premiums will continue to be deducted unless they meet the deductible amount.  

Below are the catastrophic plan for high deductibles 

  • For families ( nuclear or joint family) – $17,100
  • For individuals – $8,550

Unless the deductibles are met, the applicants must continue to pay the full price of the health care. 

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Catastrophic Health Insurance: Coverages

Catastrophic Health Insurance Plans
Catastrophic Health Insurance Plans

Like any other health insurance, Catastrophic insurance also promises essential health benefits. What’s under the essential health benefits (EHB)? Check out below- 

The Affordable Care Act, known as ObamaCare, gave a blueprint for the health benefits that an individual or family can expect. However, each state has modified its scope of health coverage, but some basic EHBs that have to be met are- 

  • If hospitalization is required, like checkups, treatment by physicians, nurses, pharmacy services, and surgical services. 
  • Emergency services such as essential services like air ambulance transportation. 
  • Chronic Disease and preventive services. 
  • Maternity health care covers delivery, post-delivery, and newborn checkups.
    • Under this category with no cost-sharing, some particular tests are also coordinated, such as Hepatitis B, gestational diabetes, and RH Incompatibility. 
  • Mental as well as substantive health care services. 

However, all these essential health care services won’t be accessible unless the insurers pay the total deductible. 

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The exceptions

Two exceptions to any health care insurance plan must be met even if the insured fails to pay the deductible. Those are- 

  • Catastrophic health insurance should pay the certain preventive health care services such as screening mammograms, flu vaccines, contraception, or woman’s visits. 
  • The plan should readily pay for the primary care provider at least three times a year for the insured. (Remember, you may need to pay the copay for those visits). 

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Who is eligible for Catastrophic Insurance? 

Before applying for catastrophic health insurance, the next step is to check who is eligible for their different plans. So there are two conditions for qualifying- 

  • The candidate must be below thirty years of age, and
  • Should pass the hardship exemption. 

You may ask what’s a health exemption! So, it’s for those who can’t afford health insurance because of their personal or financial hardship, such as they are being homeless, bankrupt, etc. Below are listed some of the qualifications for the exemption –

  • Domestic abuse. 
  • The bankruptcy of the company.
  • Your close relative expires. 
  • Homelessness. 
  • Faced eviction.
  • Being a victim of natural, fire, or another human-caused disaster that results in property damage. 

Exemptions are for those who otherwise failed to pay the regular health care coverage. The exemptions are available for claiming from the annual tax returns and getting the money return. 

Is there any catastrophic health insurance over 50? 

Catastrophic health plans are primarily for young individuals who are below the age of thirty. So, you can’t apply for the health insurance plan if you are over fifty years of age. However, you may try out some other kinds of health plans.

The federal health insurance program sponsored Medicare plan is made for senior citizens or people with disabilities. Unless you opt for specific choices, they will offer original Medicare services to you. 

What is a catastrophic health plan? How much does it cost? 

Some health insurance analyses have considered Catastrophic health insurance plans as the most affordable, considering $173 monthly. But that again can raise a total high deductible amount of $8,700, according to Kaiser Family Foundation. 

We have taken a comparative approach and compared the catastrophic monthly rates with other ACA plans. What we found is that, indeed, Catastrophic health insurance offers benefits at lower premiums. Like- 

  • The basic level bronze plan costs $329;
  • The basic level silver plan costs $428 and
  • The basic gold plan price is $462
  • The basic catastrophic plan costs nearly $173 a month. 

Another positive side to the catastrophic plan is that it’s the only health insurance plan without any coinsurance. So, coverage will be 100% once you have paid the total deductible. 

Advantages of getting a Catastrophic Health Insurance Plan

There is more than one reason to apply for the catastrophic health policy. Those are- 

  • The financial coverage by Catastrophic health insurance saves hefty medical expenses. It helps in safeguarding a lot of personal savings. 
  • The lower monthly premiums make it the best alternative to other higher-cost health insurance plans. 
  • The reduced financial baggage gets extended to senior citizens or aged persons with no premiums hike. 
  • Once you pay the total deductible, they will provide coverage, including medical emergency costs, monthly checkups, and other health coverages. 
  • Catastrophic insurance also offers greater scope for selecting the right deductible depending on the base plan. 

Measures to take before buying the catastrophic policy

  • Make sure that you check the terms and conditions to minimize the chances of fraudulent activities or ensure all sorts of treatment coverages are part of the insurance. 
  • Stay consistent with the present insurer. Sticking with the current insurer will waive off the waiting period for already existing diseases. So, long-term customers can have coverage as soon as possible. 
  • You can avoid the extra charges out of your pocket by selecting the right deductible closer to the current health plan. 

Downsides of Catastrophic Health Insurance Plans

While the plus about the Catastrophic plan is its lower monthly premiums, health insurance is not free from drawbacks. Those are-

No subsidy is available to pay for the premiums

There’s no subsidized version of catastrophic insurance because each plan is for people who are not eligible for government assistance.

However, that’s not the hardcore problem, as individuals may qualify for government subsidies also. We suggest that if you get a subsidy, invest in better-upgraded plans such as the golden health plan. 

Secondly, catastrophic plans are not a good fit for the health savings plan

So, probably for those who require health savings accounts as a tool for sustaining those high deductible plans, Catastrophe insurance is not made for you.

In such cases, you have to choose an alternative plan for partnering with a health savings account. 

Full coverage is only available after paying high deductibles

The problem with the Catastrophic plan is that if you fail to pay the high deductibles soon, they won’t cover your emergencies. They only take your health coverage after the full payment.

So, you must spend huge out-of-pocket money if something unfortunate like an accident happens suddenly. 

What Catastrophic Health Insurance fails to cover? 

As mentioned earlier, the plan will not cover any emergency issues other than providing primary care three times a year if the deductible is not met.

Otherwise, they function like any different health insurance plan where the services may differ as per the providers. Any health insurance plan won’t cover cosmetic surgeries or other elective procedures.

Mostly, the experimental treatments are also secluded.  

Way of getting Catastrophic Health Insurance Plans

All those who meet the basic qualification of Catastrophic insurance (see above) can apply for it through the US state’s exchanges or the ACA marketplace.

There are many intermediary sites available on the internet that help you locate your state’s marketplace webpage. They will ask you to fill the application and register for the health insurance plan.

Before confirming your membership in any of the health insurance plans, don’t forget to revise their terms and conditions and then decide on the deductions. 

Alternative to Catastrophic plans: Some other health insurance plans

  • COBRA- For those who lost their job recently, the COBRA health insurance plan is for them. Under the plan, you would be required to pay 100% of the cost of health insurance with 2% administrative charges to retain your previous employer’s health insurance. Comparatively, it’s one of the most expensive plans than catastrophic health insurance. 
  • Short-term health insurance. While the monthly premium for those health insurance is low cost, the health coverages are meant for a temporary period. So, it won’t remain effective if any emergency arrives after exceeding that period. 
  • Medicaid. For those who are low-income American citizens, a Medicaid health insurance plan has been made. The federal health insurance program has initiated the Medicaid plan. However, such health insurance excludes noncitizens and other sections of American society. 

The End! 

When your future is uncertain because of any kind of hardship like bankruptcy, Catastrophic health insurance gives you some sort of health security. By paying a lower monthly premium/once the deduction amount is paid, you can enjoy wide coverage of health care facilities.

However, the health insurance plan excludes any kind of elective procedures such as cosmetic surgeries and experimental treatments of the insured.

So, before registering, read the terms and conditions to have an idea about their coverages and the details of your catastrophic health plan.

Frequently Asked Questions (FAQs)

Q.1. What does catastrophic health insurance mean?

Answer – Catastrophic insurance is low-cost health coverage meant for US residents who are below the age of thirty and is going through any kind of hardship or exemption.

The exemption may include personal or financial devastations such as bankruptcy, property loss due to natural or artificial disasters, etc.

Q.2. Which individual is a good candidate for catastrophic health insurance plans?

Answer- If you are below the age of 30 or are facing any hardship, then you are a good candidate to think about catastrophic health insurance plans. Those who won’t get government subsidies will likely be beneficiaries of such health insurance. 

Q.3. What are the main downsides of getting catastrophic health insurance plans?

Answer- The biggest drawback of catastrophic health insurance is that all medical coverages (except the exemptions mentioned above) are only available after paying out the total deduction.

Secondly, senior citizens can not apply for catastrophic health insurance.

Q.4. What do catastrophic plans not cover?

Answer- The catastrophic health insurance will not cover elective processes such as cosmetic surgeries or experimental treatments. 

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