Health insurance is crucial to providing coverage for health services should the need arise. However, you may not need to full range of coverage that most health insurance plans offer in some cases. If you're a healthy person who needs a simple health insurance plan, catastrophic health insurance may be for you.
Catastrophic policies are stripped-down health plans with low monthly premiums and high deductibles. They cover emergencies and preventative care within certain limits. These catastrophic health insurance plans don't cover emergency care until you meet the deductible. And they may only cover a certain amount of preventative care measures.
These plans are a tier below the "bronze" and "silver" policies offered by the Health Insurance Marketplace.
Many people don't often need to see a doctor and/or have limited funds. They may benefit from having this form of coverage to fall back on when necessary. Those with chronic health issues may need to consider a more comprehensive health care plan as a catastrophic plan will likely not give you the coverage you need.
Catastrophic health insurance is not available to everyone. To be eligible, you must be younger than 30 or meet the financial hardship exemption requirements. There is an application process for the exemption to assess your financial situation. Those who meet certain income thresholds are eligible, as well as those who fall into the following categories:
You are or were homeless.
You're being evicted, or your home faces foreclosure.
You lost your home to a natural disaster.
You're fleeing a domestic violence situation.
You recently experienced a death in the family and face unexpected expenses.
You have substantial debt from a past medical issue.
You care for a loved one with severe illnesses and incur unplanned costs.
You're filing for bankruptcy.
For more specific information about the hardship exemption for catastrophic health coverage, visit the health insurance marketplace website.
As of 2019, Americans are no longer required to carry a form of health insurance or pay the penalty. However, you can opt to purchase a catastrophic health insurance policy as a safety net for emergencies.
These policies usually cover a few doctor's visits per year, and any emergency coverage only after meeting the deductible. This is useful for otherwise healthy individuals who would like some coverage for their annual checkups and don't need coverage for anything substantial. It also provides a safety net for unexpected medical emergencies.
Keeping COVID-19 in mind, otherwise healthy individuals may find some peace of mind in a catastrophic policy should they fall seriously ill. While COVID-19 does not seriously affect most of those who contract the virus, complications are severe and potentially life-threatening for the remaining few. Having a catastrophic plan in place can prepare you for the worst-case scenario in times like this.
Catastrophic health plans are available through the Health Insurance Marketplace for those who are eligible. Remember that if you are over 30, you must qualify for a hardship exemption. The forms are available on healthcare.gov, and you will need to show that you meet specific guidelines for financial hardship, such as those described above.
Costs are set by the insurance carrier and may vary between plans. A catastrophic health insurance plan will generally have low monthly premiums and a high deductible and cover some preventative care such as vaccinations and appointments with a primary care doctor.
In 2020, the deductible for catastrophic health insurance plans is set at $8,150. Once you meet this deductible, your policy pays for all covered expenses with no coinsurance or copayment.
You also won't be able to use a premium tax credit to cover the premium costs you could on a silver or bronze health plan. While the monthly premium is low, it is a "what you see is what you get" cost. Keep this in mind when shopping for policies, as you may find that a silver or bronze plan is more cost-effective for you in the long term.
Health insurance in the United States is a large expense for most, and there are no signs that this will change in the near future. A catastrophic health insurance plan may be a way to give you just enough coverage to provide you with peace of mind. But this type of plan is not intended for everyone. Make sure to research all plans available to you and determine your individual medical needs before choosing an insurance policy that's right for you.
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