What Is Catastrophic Health Insurance?
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If you’re having trouble affording your health insurance, you might be tempted to just go without coverage. But that can be a financially devastating mistake if you ever suffer a catastrophic injury, such as if you’re in a car accident and need multiple surgeries. Catastrophic health insurance coverage can help make large medical bills more affordable while being a lower-cost alternative to traditional health insurance plans.
Catastrophic health insurance is a plan that’s designed to help cover your medical bills in worst-case medical situations. This type of insurance is designed for those life-changing events that would financially devastate you if you didn’t have coverage.
A catastrophic health insurance plan has a low monthly premium, so it’s easier for individuals on tight budgets to afford. However, the plan has a high deductible, often close to $10,000, and out-of-pocket maximums are high, too. Since the deductible and out-of-pocket maximum are so high, this type of health insurance isn’t designed for everyday healthcare needs, such as minor illnesses and injuries. Instead, it helps you pay for significant healthcare expenses.
Catastrophic health insurance coverage includes some basic services, like vaccines, annual check-ups, emergency services, hospitalization, prescription medications, rehabilitative services, and pregnancy and pediatric care. Be sure to carefully review the coverages and exclusions for any plan that you’re considering.
Remember that while the plan may offer coverage for a wide variety of services, you’ll usually need to pay your deductible before your policy will cover those services. The exception to this is preventive services like vaccinations, which are usually covered in full. For example, if your policy has a $9,000 deductible, you’ll need to pay out-of-pocket for your healthcare services – even those that are covered under your policy – until you pay the full deductible amount. Then, your insurance will start to cover those expenses.
Catastrophic health insurance may help you afford health insurance coverage, but it’s not the right choice for everyone. To qualify, you’ll need to be under 30 years old or you must qualify for a hardship exemption. A hardship exemption is a situation that makes it difficult to pay for insurance, such as if you’ve declared bankruptcy, are homeless, have been evicted, or are a victim of domestic violence.
Think of catastrophic health insurance as being a temporary policy to help you in emergencies. This coverage isn’t ideal for anyone who has significant predictable healthcare needs, such as if you’re living with a chronic illness. While this type of policy can help you cope with emergencies and steep care expenses, it’s important to consider how you’ll pay your deductible if you should have significant healthcare needs.
If you think that catastrophic health insurance coverage is right for you, you can get free quotes online today to start comparing your options. Comparing quotes can help you find the best price on the policy that’s right for your needs.
Paige Cerulli Paige Cerulli is a freelance content writer and journalist who specializes in personal finance topics. She graduated from Westfield State University and brings more than a decade of professional writing experience to the ConsumerCoverage team. Paige’s work has appeared in outlets including USA Today, Business Insider, and more.
