What is Catastrophic Health Insurance?

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Catastrophic health insurance refers to low-cost medical coverage that is specifically for those facing financial hardship. Catastrophic plans have low premiums, but high deductibles and other out-of-pocket costs. They are designed to protect individuals in worst-case scenarios, but do not provide coverage for most non-emergency healthcare costs.

Who is Eligible For Catastrophic Health Insurance?

To be considered eligible for a catastrophic health insurance plan, you must be under 30 years old and/or qualify for a hardship exemption.

Hardship exemption is a term used to describe a circumstance that prevents an individual from being able to afford health coverage. This can include financial hardship caused or demonstrated by any of the following:

  • Homelessness
  • Facing/faced eviction or foreclosure
  • Utility shut-off
  • Fire, flood, or other natural disaster
  • Domestic violence
  • Declaration of bankruptcy
  • Unpaid medical expenses
  • Ineligibility for Medicaid

Other hardships in obtaining health insurance may be considered if described in the exemption application. You can complete an application for a hardship exemption at HealthCare.gov, or you can claim the exemption on your federal tax return without the need to provide documentation.

How Can I Enroll?

If you are under 30 and interested in enrolling in catastrophic health insurance, you can purchase a plan on the federal Marketplace at HealthCare.gov. Catastrophic plans will be displayed alongside all other healthcare plans during the Open Enrollment period. Those over the age of 30 interested in catastrophic plans must file for a hardship exemption.

For more information on Catastrophic plans and eligibility requirements, you can visit the HealthCare.gov Catastrophic Health Plans page. You can also call HealthCare.gov with questions and concerns at 1-800-318-2596.

What Does Catastrophic Health Insurance Cover?

The purpose of a catastrophic health insurance plan is to provide coverage for those in need of a low-cost plan. Policyholders can decide which medical services they need and when they would like to receive them. Most services will require out-of-pocket costs with the exception of preventive services – such as immunization shots and screening tests. Catastrophic plans will also cover 3 primary care visits a year before you meet your deductible.

Catastrophic health plans are considered adequate health coverage under the Affordable Care Act, meaning they cover the following ten essential health benefits:

  • Ambulatory and outpatient services
  • Emergency services
  • Hospitalization
  • Maternity and natal care
  • Mental health
  • Prescription drugs
  • Rehab services
  • Lab tests
  • Preventive and wellness services
  • Pediatrics (including oral and vision care) 

What Are The Costs of This Insurance Plan?

Monthly premiums for catastrophic health plans are typically low. They can range between $175 and $200 a month, depending on your insurer. Unlike other health plans, catastrophic plans do not allow policyholders to use a premium tax credit or subsidies to reduce their premium costs. Regardless of income level, policyholders with a catastrophic plan will have to pay the standard premium amount.

Catastrophic plans have high deductibles, meaning policyholders will have to pay high out-of-pocket costs before their insurance begins to cover their medical expenses. For 2020 plans, the deductible of catastrophic insurance is $8,150. This includes copayments and coinsurance, but does not include monthly premium payments.

Are There Other Types of Catastrophic Health Insurance?

There are various types of catastrophic health insurance plans that offer protection for policyholders in dire circumstances. Each plan is meant to cover the costs associated with unexpected diagnoses or accidents, and are considered supplemental to essential health coverage. 

Accident Insurance

Accident insurance helps cover medical expenses and out-of-pocket costs that an individual may incur after a major accident. Insurance companies offer the injured individual a large lump sum of money (payouts) to help them pay for medical services related to their accident. This includes emergency treatment, in-patient services, and medical exams. It can also include transportation services for those with injuries that limit mobility.

Critical-Illness Insurance

Critical-illness plans offer individuals payouts to support them through serious illnesses. Most critical-illness plans cover cancer, strokes, and heart attacks, but can also include kidney disease, Alzheimer’s, organ transplants, and visual/hearing impairments. Insurance payouts can be used to cover alternative or specialized treatment outside of a provider network, pay high medical bills that are not covered by your primary health plan, and cover medical bills when an individual can no longer work due to their illness.

Fixed-Benefit Indemnity Medical Insurance

A fixed-benefit indemnity insurance plan gives policyholders a fixed cash payout for medical services covered by their insurance. This plan works by offering financial aid in the event of random, non-emergency health care visits. This includes urgent care visits and lab tests.

Why Should You Get  Catastrophic Health Insurance?

A catastrophic health plan may be right for you if you cannot afford or do not qualify for other types of health insurance. Monthly premiums will be low in cost, but it’s recommended to continuously save money for any unexpected high medical costs. Those interested in catastrophic health insurance should be generally healthy and not exhibit any existing health conditions that require regular medical visits. Maintaining a healthy lifestyle is important with this plan, as it relies on the well-being of an individual to remain an affordable option.


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