You may also know catastrophic health insurance as High Deductible Health Plans (HDHP), but do you know what they cover and who are good candidates for this kind of health insurance?
If you answered, “No” you are not alone.
High deductible health insurance plans were created to lower the overall medical costs to an individual by providing a lower monthly premium in exchange for a higher yearly deductible.
High Deductible Health Plans
When you have a high deductible plan, you are required to pay out of your own pocket for just about all of your medical bills until the total of your payments reaches the amount of the yearly deductible.
Once that has been reached, the catastrophic health plan will then cover most medical expenses, although it may be necessary for you to pay co-insurance until you reach the total out of pocket maximum.
You will want to check and see if your plan is eligible for a Health Savings Account (HSA), as then you can use the HSA funds to pay towards the deductible as well as out of pocket expenses. If you do not have a HSA, then you should still put aside funds each month for future medical bills that may come up.
HDHP’s can also have a high lifetime maximum benefit payment limit or “cap.” This is normally between $1 million and $5 million and should you reach the cap, the health insurance company will not pay for any additional medical expenses and the policy will be canceled.
Getting Catastrophic Health Insurance
You can get high deductible health insurance by purchasing an individual plan or a group plan. There are particular pre-existing health conditions (like diabetes or mental health disorders) that may disqualify you for this kind of health plan.
If you are applying for coverage under a group plan, then they are subject to HIPPA regulations and cannot deny you enrollment or coverage, but you may have to wait for coverage of pre-existing conditions. This depends on the prior health insurance coverage, so be sure to ask questions and that you understand what will be covered or not.
Catastrophic Health Insurance Considerations
Please realize that the reason the premiums are lower with this kind of coverage is because the health insurance company knows that, when you need medical care, you will be paying a larger portion of your costs. You will need to pay out-of-pocket for the majority of medical expenses before you reach your annual deductible.
If your main attraction to high deductible health insurance is the money you will save, you will need to consider the higher (and sometimes much higher) fees you will have to pay before the insurance coverage begins. You will need to weigh this possibility against your monthly savings.
If you are sure that you can cover the deductible and would like to save monthly on the premiums, then this could be a plan that would work very well for you.
Of course, if you have a HSA, then you can use that to pay for out-of-pocket medical expenses while still saving on the premium.
Catastrophic health insurance is best for those who are young and healthy or for those (possibly older) individuals who have enough money to pay for medical care until a serious illness or emergency comes up.
Really, the high deductible plans are best for those who do not have frequent doctor visits or need regular prescriptions.
Yuma Insurance – Steve Meinhardt – Health Insurance Expert
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