For some people, the preventive care options provided by traditional health insurance plans are not a benefit they want or can afford. Instead, a health insurance policy that covers them only in the case of a catastrophic event, such as a car accident or emergency surgery, is much more appealing and affordable. For these people, catastrophic coverage (also called major medical) offers the perfect balance between reasonable coverage and cost
What is Catastrophic Coverage?
Catastrophic coverage is generally sought out by individuals who do not anticipate needing full health coverage benefits but who do want the security of coverage in the event of an unexpected, emergency need.
Catastrophic health insurance often has a high deductible and low monthly premium, making it ideal for adults in their 20s who are without group coverage and adults between the ages of 50 and 65 who are primarily concerned with financial losses associated with heart attacks, accidents, and other serious illnesses. They are generally healthy, take few or no prescription medications, and would rather pay out-of-pocket for the occasional office visit to save on their monthly insurance premiums.
Deductibles
Catastrophic plans typically cover only major hospital and medical expenses above a certain deductible. The insured is responsible for paying the entire deductible, together with follow up doctor visits and any prescription drugs. Deductibles typically start at $2,500 and can be much higher-the higher the deductible, the less expensive the monthly premiums. If your treatment costs do not exceed your deductible, the insurer will pay nothing.
Limits
Most catastrophic health plans have lifetime maximum benefits payments. Once the expenses of your treatments have reached the amount of your cap, the insurance company will not pay for additional medical expenses and the policy will be voided.
Considerations
Before you buy a catastrophic health plan, consider:
- How much of a deductible can you afford?
- How extensive do you want your coverage to be?
- Do you need prescription medicines?
- Can you afford to pay for your own doctor’s office visits?
- Do you have any pre-existing conditions?
- Do you get sick often?
