What’s Catastrophic Health Insurance and Do You Need It?

A healthy individual in her mid-20s who exercises regularly and sticks to a nutritious diet probably doesn't expect to visit a doctor more than once or twice a year (short of being involved in a terrible accident). Perhaps a bare-bones health plan is all she needs — and all she can afford right now.

So what are her options? She can explore HMO plans, which designate a primary care physician to handle her medical care, and PPO plans, which are more flexible. Or, she can look into a catastrophic health insurance plan, known for having low monthly payments and high deductibles.

Qualifying for a Catastrophic Health Plan

This type of health policy is intended to cover young people and those going through difficult times. Individuals younger than 30 years old are eligible, which is the age cutoff for qualifying for a catastrophic health insurance. People 30 or older, however, can qualify if they're eligible for a hardship or affordability exemption. Some examples include: homelessness, eviction, bankruptcy, death of a family member, foreclosure, and a number of other reasons listed on HealthCare.gov.

Expenses to Expect

People who opt for a catastrophic health plan can expect to pay lower monthly payments than they'd find through other plans. Sounds like a good deal, right? Here's the catch: While the monthly payment is lower, catastrophic plans have higher copays and deductibles than standard plans, and your percentage of the cost is higher. That means you will likely pay less monthly, but more out-of-pocket if you end up facing a serious health issue during the year. Another downside of a catastrophic health plan--you must give up any tax credits you qualify for.

Catastrophic Coverage

Catastrophic health plans cover at least three primary-care doctor visits per year. After that, no additional benefits are available until the plan's deductible is met. The deductible for this type of plan was $7,150 in 2017, according to HealthCare.gov. The plans also include essential health benefits (here are 10 the Affordable Care Act requires all health plans to offer) and preventive services at no cost.

Learn More

Want to learn more about whether this type of plan is right for you? Visit HealthCare.gov for more details on catastrophic health insurance and how it offers protection from worst-case scenarios.

Sources:

https://www.healthcare.gov/glossary/catastrophic-health-plan/

https://www.healthcare.gov/choose-a-plan/plans-categories/#catastrophic

https://www.healthcare.gov/health-coverage-exemptions/hardship-exemptions/

http://time.com/money/4251595/best-healthcare-for-freelancers/