There are many different health insurance types and variants, and choosing the right one can sometimes be a matter of great difficulty for a few reasons. The most common reason is the price as many individuals do not want to spend large amounts of money on a service that they may never use or even come to rely on. That said, catastrophic health insurance is becoming a popular option in the event the individual applies qualifies for a hardship extension. Let’s talk a bit about what catastrophic insurance is and what the benefits are going to be should you decide to carry it.
Understanding Catastrophic Insurance
This is a high deductible healthcare plan that is available for those under the age of thirty so long as they apply for the hardship exemption. What does it cover? What can you expect from it? To put it as simply as possible, a catastrophic plan will protect the individual policyholder in the event of a worst-case scenario. A good example of a worst case scenario would be a medical emergency that costs thousands of dollars. Your monthly premium will definitely be lower with a catastrophic plan, but you will need to pay for all health care costs yourself until you’ve reached the annual deductible. In other words, the plan will not kick in unless you encounter the worst case scenario.
An Overview of your Benefits
The benefits for catastrophic insurance are lower than a regular plan but they are still pretty substantial. Under the Affordable Care Act, a catastrophic plan covers many of the same preventative services that you would find in any other plan including:
- Emergency Services
- Prescription Drugs
The high deductible requirement is not something that is going to apply to every single scenario. In a catastrophic health plan you will still have coverage for the following benefits, even if the yearly deductible has not been met yet:
- 3 Primary Visits Per Year
- Free Preventative Services
While these are free, you will still pay full price for any other health care services that you use until you manage to meet the deductible. Under the catastrophic insurance plan, other expenses like copayments and coinsurance are going to be higher. The saving grace here is that the monthly premium is going to be far lower than with other major medical plans. In other words, yes, you’ll save money, but you will pay in coverage over time.
Differences from Short Term Plans
Any catastrophic health coverage that you hold will differ significantly from an accident, short-term, or critical illness plans. The three that we just mentioned are plans that are limited to very specific situations. Take critical illness plans as an example: these will ensure the policyholder against very specific illnesses, but not much else. A short-term plan is something that will provide temporary coverage when the individual in question cannot enroll in a major medical health plan. This typically happens when the enrollment period is closed to ensure that there is no coverage gap.
Catastrophic plans are able to cover the exact same health service as major medical plans so long as you have managed to meet the yearly deductible, which definitely sets them apart from the other inexpensive options out there.
How to Enroll in a Catastrophic Plan
Not everyone has the ability or the right to enroll in a catastrophic plan. In fact, you will need to be under the age of thirty, or you will need to qualify for a hardship extension. A hardship extension proves that you are in a situation that keeps you from being able to afford proper coverage.
You will need to qualify for a hardship extension which is defined as a situation in which are unable to afford basic health coverage. These two situations are the most common:
- You were Homeless In the Last Three Years
- You were Ineligible for Medicaid Due to Your State Not Expanding the Medicaid Program
There are other good examples of hardship extension circumstances and you will need to inquire with your specific state to find out. If you think that you might qualify for an exemption due to hardship, then it will up to you to apply for coverage through the Marketplace. If you do qualify then you will be sent a notice confirming such, and you will be redirected to the available catastrophic plans. As per always, you will still have the ability to apply for a major medical plan if you so desire.
How to Tell if a Catastrophic Plan is Right for You
Is a catastrophic plan going to be the right choice for you? Something to keep in mind is that if you do qualify for a lower cost plan due to income you will not be able to apply savings toward a catastrophic plan, so think carefully before you purchase. Finally, consider the following, as these might be signs that you need a catastrophic health insurance plan:
- You want Lower Premiums
- You Cannot Afford More Expensive Coverage
- You are Healthy and Do not See the Doctor Options
- High Costs out of Pocket Do Not Bother You
- You Wish to be Prepared for the Worst Case Scenario
- You Don’t Qualify for your State’s Medicaid Program
You may also find that you do not qualify for a subsidy based on your income, or, if you do, you could forego it. Something to remember is that you cannot get premium credits or even out of pocket subsidies if you are working with a catastrophic plan!
Each and every situation is going to be different and you’ll need to take a look at all of your options. Look at your needs, look at your budget, and most importantly, look over the available plans.