Catastrophic Health Insurance Coverage
By Melanie Ullman
Catastrophic health insurance plans are “fee-for-service” health insurance policies that provide you with protection against a catastrophe such as catastrophic illness or accident. The main function is to limit your financial liability should you have a serious problem like a heart attack or stroke or a heart attack. Catastrophic coverage is often purchased by those who are self-employed, or in cases where an employers plan offers only limited coverage. This type of insurance, sometimes referred to as High Deductible Health Insurance, is also popular for those with limited incomes or are in very good health, and who don’t necessarily want to pay for basic coverage that they may not want or need.
There are two basic types of catastrophic health insurance plans come in two basic forms, comprehensive and supplemental. With a comprehensive plan the coverage you get is somewhat comparable to a common traditional health care policy. You would likely have low monthly fees and a very high deductible. The primary reason for getting a comprehensive plan is so that you cover yourself for emergency services, such as emergency room visits or ambulance ride, while paying a lower monthly premium than a you would have to pay with a traditional insurance plan. A supplemental plan on the other hand acts in conjunction with whatever existing insurance plans you might have. The benefits of a supplemental plan would be to offset the costs that aren’t covered in your basic plan, such as psychiatric or nursing care, medical appliances, etc.
Most commonly, a catastrophic insurance policy is purchased by relatively healthy, young individuals who don’t anticipate or want to visit doctors on a regular basis, and don’t need or aren’t concerned with any sort of prescription drug coverage. Older individuals also seek this type of policy to limit their financial exposure, particularly as traditional health insurance may be unaffordable given their age, or where they may not even qualify for it.
If you have an HSA, or Health Savings Account, you can use those funds for qualified medical expenses. An HSA allows you to make tax-deferred deposits, and the money stays with you even if you leave your employer or terminate your insurance plan. You can also invest the money you have accrued in your HSA while sheltering all of it’s earnings from being taxed.
It’s important to know that in addition to conditions that might exclude you from a traditional health plan, there are even more conditions that can qualify to make you ineligible for catastrophic coverage. Most of these plans also suspend maternity coverage both during and after pregnancy, sometimes for up to a year.
Still, for those individuals with the appropriate needs and circumstances, catastrophic health insurance coverage can be the ideal alternative to paying for unnecessary or unwanted services, while minimizing the risk of financial ruin in the case of an accident or serious medical condition. Needless to say, it pays to be thorough in considering the types of plans and providers, and carefully weigh the costs and benefits against the foreseeable future.
If you do fit the profile, though, this kind of plan could be perfect for you. That is why it is vitally important to be careful, thoughtful and deliberate when shopping for your health insurance.