Understanding Catastrophic Health Insurance: Is It the Right Choice for You?
Posted: May 08, 2024
Choosing health insurance that meets your needs is one of the most important decisions. One option is catastrophic health insurance. This medical coverage is for people under the age of 30 and adults who meet hardship exemption requirements.
Catastrophic health insurance is limited to eligible individuals. If you do qualify, understanding the pros and cons can help you decide if it’s the right health insurance for you.
What Is Catastrophic Health Insurance?
Catastrophic health insurance is an individual health insurance plan with high deductibles but low monthly premiums. These health plans cover you in worst-case scenarios like major medical diagnoses or significant injuries.
Before the Affordable Care Act (ACA) came into effect, the term “catastrophic coverage” was broad. People used it loosely to describe any health plan with high deductibles and limited coverage for routine medical needs. With ACA’s new health plan structures, catastrophic health insurance is a specific type of individual health plan not available as employer-sponsored coverage.
How Does Catastrophic Health Insurance Work?
If you are interested in catastrophic health insurance, you can purchase it yourself through a trusted health insurance provider. As with any health insurance plan, you will complete a questionnaire and get a quote from the enrollment company. After accepting the quote, you will enroll in the plan and pay deductibles.
What Do Catastrophic Health Plans Cover?
Like all ACA plans, a catastrophic health care plan must cover the 10 essential health benefits:
- Emergency services
- Hospitalization
- Ambulatory patient services or outpatient services
- Preventive and wellness services and chronic disease management
- Prescription medication
- Laboratory services
- Maternity and newborn care
- Pediatric services, including oral and vision care
- Mental health and substance use disorders
- Rehabilitative services and related devices
Though catastrophic health insurance does cover these essentials, you have to pay a significant out-of-pocket fee before your insurance company shares the cost. On the positive side, payments for these medical services count toward your deductibles. Once you meet the deductible, your insurance company will start covering your medical costs.
In the event of a serious illness or major injury, you may reach your out-of-pocket maximum quite quickly. At this point, the insurance company will cover all qualifying health expenses included in the plan.
Do I Qualify for Catastrophic Insurance?
Take a closer look at who can benefit from catastrophic health insurance:
- Young adults: People under 30 qualify for catastrophic health care.
- People with medical savings: If you qualify for catastrophic health insurance, it may be ideal if you have a medical savings account that can cover out-of-pocket expenses before you meet your deductible.
- Individuals in good health: A catastrophic health insurance plan may suit you if you are in good health and rarely visit the doctor. Remember, this type of plan provides little coverage for routine care. If you are in good shape, you can limit your out-of-pocket expenses.
- People with limited financial resources: Financial restraints shouldn’t hold you back from the security and peace of mind health insurance offers. For this reason, catastrophic health insurance plans cover individuals who qualify for a hardship exemption, regardless of age. You can qualify for a hardship exemption if you cannot afford other health plans, have medical debt, have filed for bankruptcy or have been evicted.
Examining these factors from the other side is also wise. A catastrophic plan might not be for you if:
- You are eligible for subsidies to receive discounted rates on a more suitable plan.
- You don’t have the savings to cover medical for yourself, especially if you require regular doctor’s visits.
Understanding Catastrophic Health Insurance: The Pros and Cons
Catastrophic health care insurance can be extremely beneficial for qualifying individuals. Some advantages of this health plan include:
- Lower premiums: Catastrophic health plans are designed to be affordable for younger people with lower incomes. These are cost-effective plans for eligible people with financial restraints. The low affordable premiums are arguably the greatest advantage of catastrophic health insurance plans.
- Protection against high medical costs: Catastrophic health insurance plans offer a safety net for significant and unexpected medical emergencies.
- Essential health benefits coverage: Catastrophic health care plans fully cover the 10 essential health benefits once you reach your out-of-pocket limit.
You should also note the downsides of catastrophic health insurance, including:
- High deductibles.
- Limited coverage for routine health care.
- The potential for high out-of-pocket costs that outweigh low premiums.
FAQs About Catastrophic Health Insurance
The answers to these common questions may also help you decide if catastrophic health insurance is your best option:
1. Can I Get Short-term Catastrophic Health Insurance?
Several states have banned short-term health insurance plans, including California. However, it’s often safer and more effective this way. ACA-compliant plans are affordable and comprehensive. Additionally, many short-term products are unregulated and can endanger consumers.
2. How Can I Apply for Catastrophic Health Insurance?
Health for California offers a free and user-friendly platform that makes it easy to apply for health insurance. Our team of experts is also here to help you make sense of your options and choose the right one for your needs and budget.
3. Are There Cheaper Plans Than Catastrophic Health Insurance?
Catastrophic health care won’t be the most affordable option if you meet the income threshold and qualify for a health insurance subsidy. Depending on your income, you may qualify for a subsidy that covers a large portion of your monthly premiums.
Why Seek Expert Guidance for Catastrophic Health Insurance?
Obtaining hardship exemption can be a challenging and lengthy process — professional guidance can make the path simpler.
Additionally, catastrophic health insurance doesn’t typically appear on lists of eligible plans for people over 30. A reliable health insurance agency makes all of your options clearly available. That way, you can make the right choice for your health and finances.
If you feel catastrophic health insurance is the right option, contact a reputable health insurance agency today so they can guide you through the process.
Contact Health for California for Catastrophic Health Insurance
Are you a California resident? Health for California’s certified health insurance agents are here to assist you. We’ve helped Californians choose the best health care plans for their needs since 2004, offering expert advice for a diverse range of insurance plans.
With our platform, shopping for a new plan is easy. You can browse various metal tiers and state insurance providers according to your unique requirements. You can also explore supplemental plans for dental and vision health care. Contact us today to get a free quote or discuss your questions with a friendly Health for California representative!
