Everything You Need to Know About Catastrophic Health Insurance

catastrophic health insurance

If you’re young and healthy, you may find it hard to justify the cost of health insurance. We all know it’s a responsible, adult thing to have, but why spend hundreds of dollars per month if you don’t ever use it?

That’s where catastrophic health insurance comes in. This type of inexpensive health plan is primarily used by young people who don’t need much health care during the year, but still want protection in the event of a medical emergency.

What Is Catastrophic Health Insurance?

Catastrophic health plans have low monthly premiums in exchange for very high deductibles. This means that the insurer will only pay for most medical expenses once the deductible amount (usually around $6,000 or more) has been met. Before hitting the deductible, you’ll have to pay full price for your health care.

What’s Included in a Catastrophic Health Plan?

After the deductible is met, catastrophic health insurance plans will pay for all (or most) of any covered medical expenses, including hospitalizations and surgeries. This is the primary value of a catastrophic plan: capping your costs in the event of an emergency. If you were to end up in the hospital for five days, a plan with a $6,000 deductible would still save you upwards of $13,000!

To make sure you can still get affordable, basic health care, catastrophic plans are also legally required to include:

  • FREE preventive care, including vaccinations, screenings, and annual check-ups

  • 3 free primary care visits per year

Who Qualifies for a Catastrophic Health Plan?

You can buy catastrophic insurance if you’re under the age of 30 OR if you qualify for a hardship exemption (like domestic violence, bankruptcy, or debt from medical expenses).

Is a Catastrophic Plan Right for You?

A catastrophic plan may be a good fit if you:

  • Just want protection in case of an emergency

  • Don’t qualify for government subsidies or Medicaid

  • Don’t need to go to a doctor or specialist very often

  • Can afford the occasional out-of-pocket medical expense

  • Have enough saved in case you need to pay your full deductible  

Because catastrophic coverage is so limited, it makes getting care on a regular basis pretty expensive. We suggest opting for a different plan type if you:

  • Have children (they usually need a lot of health care!)

  • Qualify for a government subsidy

  • Have a chronic health condition (like diabetes or cancer)

  • Tend to go to a doctor or specialist often

What Are the Drawbacks to a Catastrophic Health Plan?

With their low monthly premiums, catastrophic plans can be a great resource for people who want basic health coverage. This plan type, however, does come with a few drawbacks. While you’re shopping, keep in mind that:

  • You can’t use a subsidy to pay for a catastrophic plan. That’s because this plan type was designed for people who don’t qualify for government assistance. If you’re eligible for a subsidy, lucky you! Put that money to good use and shop for a plan in a higher metal tier (and with more extensive coverage) instead.

  • Catastrophic plans can’t be paired with an HSA. Health savings accounts are powerful financial tools for people with high-deductible health plans. If you plan to use an HSA–or if you want to use one you already have–you’ll need a different plan.

  • High deductibles make health care expensive. Out-of-pocket medical expenses can get expensive fast! If you opt for a catastrophic health plan, be prepared to pay for your full deductible amount in the event of an emergency and read up on where to get more affordable care; a nearby urgent care, for instance, may save you hundreds of dollars over the ER if you ever need an x-ray or stitches.

How Can You Shop for a Catastrophic Health Plan?

Think catastrophic insurance is right for you? Start your plan search on Stride! Just enter some basic information to see available plans in your zip code, and then filter your results to only include Catastrophic options.

Aly KellerComment