Everything You Need to Know About a Catastrophic Insurance Plan

Health insurance is one of the best ways to reduce your out-of-pocket expenses when getting regular medical treatments. Unfortunately, there were more than 27.9 million uninsured people in the United States in 2018.

Why? The reasons vary, but for most, it was because coverage was too expensive.

For those people, getting any medical treatment means paying the full cost out of their savings. Catastrophic insurance can help reduce those costs, but it works differently than other insurance policies.

Here’s what you need to know if you’re considering this type of insurance.

Catastrophic Health Insurance Is Best for Emergencies

Catastrophic coverage helps cover you for unexpected emergencies. It isn’t meant for people with existing health conditions or those who need to see a doctor for specialized treatment on a regular basis.

The deductibles and out-of-pocket costs make using this coverage option for those ongoing health conditions too expensive.

However, unlike other policies on the market, catastrophic coverage offers some of the lowest monthly premium rates. This is perfect if you’re working with a tight budget or just don’t want to pay for higher-priced insurance.

You’ll Need to Meet Your Deductible

With catastrophic coverage, there are no co-pays. Instead, you’ll pay out-of-pocket for medical services received until you hit your deductible.

This amount is on top of your monthly premiums.

If you’re considering this type of coverage, you’ll want to think about whether you can afford to pay for medical care out-of-pocket. If you have enough money saved up to help pay for services until you hit your deductible, it’s a great option.

Consider that even a small hospital stay can cost thousands of dollars. Depending on the insurance plan, this could still leave you hundreds of dollars short of meeting your deductible. If you’re not comfortable footing that bill, you may want to look at other insurance plans.

It Covers Preventative Care

Under the Affordable Care Act, preventative care like regular physicals and health screenings are free even with catastrophic health insurance coverage. You’re free to see your primary care doctor up to three times a year without having to pay out-of-pocket.

Immunizations like the flu shot or tetanus boosters are free as well as long as your policy is valid. If you let coverage lapse, you’ll have to pay for those things out-of-pocket.

There Are Restrictions

In most cases, you must be under 30 years old to qualify for catastrophic insurance. This is because people in this age group are typically at lower risk for health conditions, illnesses, and disease.

The lower risk you’re at, the less likely it is that you’ll need to use your insurance.

However, there are exceptions. If you can prove that other types of insurance are too expensive, you may be able to get catastrophic coverage.

What Counts as a Hardship

The government dictates what counts as a hardship for people over 30. If you were homeless anytime in the last three years, you may qualify for catastrophic insurance. If your application for Medicaid got denied, you may also qualify.

However, if you don’t meet those requirements, you may have to explore other options through the marketplace.

With government subsidies, non-catastrophic health insurance may be more affordable than you think. Those policies offer better quality coverage and require you to pay less out-of-pocket for certain services.

There Are Times You Won’t Have to Use Your Insurance

Believe it or not, there are some instances where you won’t have to rely on your insurance plan to pay for treatment. Instead, someone else’s insurance will cover your treatment costs.

Unfortunately, this typically only happens when you experience an unexpected injury.

For example, if you’re injured at work, your employer’s workers’ compensation insurance will pay for your treatment. It can even provide a portion of your wages while you recover.

With workplace accidents, you won’t have to rely on your catastrophic coverage. You’ll submit a claim with your employer instead.

The amount you’ll receive largely depends on the severity of your injuries. Read more here to learn about the different ways workplace injuries get classified. This way, you can better understand the potential compensation levels.

When Is Catastrophic Insurance Right?

Catastrophic insurance isn’t right for everyone. It leaves you at risk for high out-of-pocket expenses and won’t give you coverage until you reach your deductible.

As a general rule, only consider catastrophic coverage you don’t go to the doctor often. Otherwise, you’ll end up paying thousands upfront for the services you need.

If you’re worried about the high up-front costs, it might be better to enroll in a different insurance policy.

What Are Your Alternatives?

Luckily, there are many different options to choose from if you decide catastrophic coverage isn’t right for you.

If your employer offers health insurance, consider enrolling in their plan. This will give you higher quality coverage, lower deductibles, and lower out-of-pocket expenses. Keep in mind that your premiums will likely still be higher than what you’d pay for catastrophic coverage, but the better coverage may be worth it.

If your employer doesn’t offer coverage, you can always shop for insurance on the marketplace and choose the right tier for your needs. Bronze level coverage provides better options than catastrophic insurance.

If you’re worried about ongoing health conditions or want to pay less for treatment, silver or gold plans may be your best choice.

Standard health insurance plans will cost more than catastrophic health insurance, but you’ll get more out of the polices.

Explore Your Insurance Options

The best way to find an insurance policy that works for your needs is to shop around. Compare the monthly premium amounts with the amount you’d pay out-of-pocket if you receive treatment.

Remember, catastrophic insurance is best for young individuals who won’t go to the doctor unless it’s an emergency. If you think you’ll need more frequent care, invest in a different type of policy.

Looking for more tips on finding the best insurance for your needs? Check out our latest posts.