What is Catastrophic Health Insurance and How Does it Work?
Catastrophic health insurance coverage is designed to make it manageable for people to pay their medical bills in cases where unforeseen illnesses or accidents cause them to skyrocket. Given this goal, this type of coverage has features that set it apart from other types of coverages. It has unique requirements as to qualifications, the extent of health coverage that it provides, and a unique characteristic when it comes to its deductibles. Here is what you need to know about catastrophic health insurance.
What are the benefits of catastrophic health insurance?
The main advantage of this type of insurance is that it typically features relatively low premiums. Therefore, it makes it affordable for people who would have otherwise gone without insurance, to get insurance coverage. This includes people who are unable to afford normal insurance premiums by virtue of their age, or by some kind of financial hardship. And while it does not provide as comprehensive a coverage as one would get from a typical health insurance plan, it provides a viable alternative to people who would have otherwise been left unprotected.
The other benefit, and why it sometimes makes financial sense to take this health insurance, has to do with the individual mandate penalty. To avoid this penalty, one has to have a kind of minimum essential coverage. Since catastrophic insurance provides you with a type of cover, if you are under the age of 30, you can avoid the weight of having to bear the cost of the individual mandate penalty by signing up for catastrophic health insurance.
However, it is important to note that while you get to pay really low premiums, there is a downside to this type of coverage. The low premiums are usually accompanied by high deductibles. This means that the insurance coverage only kicks in once you have spent a given amount of money on your medical expenses. For example, if the deductible is $7,000, you will have to cover that amount yourself, and it is only when your medical costs exceed that amount will the insurer step in. Therefore, it in a way offers limited coverage since it, in essence, provides coverage only for cases that feature runaway medical costs.
Unlike other forms of health insurance, this insurance cover is not available to everyone. Access to it is restricted. In order to avoid exploitation, there are limits as to who can be covered by this type of insurance.
People who are below the age of 30 have access to this type of coverage without any other qualifications. Therefore, they can easily enjoy the benefit of having to pay the low premiums that come with this type of coverage no matter their circumstances.
However, things are different for people who are 30 years and above. Anyone that falls in this category needs to meet the requirements that qualify them for a hardship exemption. Generally, this means that they have to be in some kind of financial hardship. For example, if you filed for bankruptcy before, experienced the death of a family member, are a domestic violence victim, were facing eviction, homelessness, or if you are facing eviction, you qualify for this exemption.
It is important to note that financial hardship alone is not enough for you to qualify for this type of insurance. There is an application that you have to go through, and it is only after getting approved will you be able to access the catastrophic health insurance plan options that are available to you.
What if you don’t meet your deductible?
In order to enjoy the essential health benefits that are provided for this coverage, you need to be able to meet your deductible. Therefore, if you fail to, you will not be able to enjoy coverage benefits for services like rehabilitation services, prescription drugs, hospitalization, emergency services, and ambulatory patient services.
However, there are things that you can still enjoy even before meeting your deductible. You will receive coverage for certain medical services. Some of the things that will be covered in spite of whether you have met your deductible or not include a limited number of visits to a primary care physician, screenings, immunizations, and basic shots.