Catastrophic Health Insurance

Catastrophe Health InsuranceFor most people, the greatest danger of losing health insurance is the possibility of a catastrophic injury or illness.  Although you can protect your health from many conditions by maintaining good habits and eating a balanced diet, you cannot predict when you might be severely injured in a car accident or catch a sudden, serious disease.  If you are forced to visit a hospital for a serious injury or illness, you can quickly find yourself overwhelmed by medical expenses.  For this reason, carrying some type of health insurance policy at all times is typically a good idea.

However, not everyone is able to buy a complete major medical policy.  If you cannot qualify for a group plan under your employer, paying for health insurance can be a challenge.  For these people, a catastrophic health insurance plan can be a good way to receive assistance with high medical costs without a hefty monthly bill.

What Does Catastrophic Health Insurance Cover?

Catastrophic health insurance is meant to pay only for medical emergencies.  This means that, unlike a standard insurance policy, it will not pay for routine and preventative healthcare.  In other words, your catastrophic health insurance policy will not pay for an annual examination, vaccinations and any prescription medications you may take.

What the policy will cover depends in part on the provider.  Some providers limit their policies only through the use of high deductibles.  Others have certain spending limits put in place, preventing patients from receiving coverage for bills under a certain limit.  Still others limit their payments to specific treatments, such as hospitalizations.  It’s important to check with any insurance company to confirm exactly what the plan will cover before deciding that the policy is right for you.

When Should You Consider Catastrophic Coverage?

  • When you are otherwise very healthy
  • When you have no preexisting medical conditions
  • When you take inexpensive or no prescription drugs
  • When you do not visit doctors frequently
  • When you want the most affordable premium available

If you want coverage only for emergencies and are willing to pay your other expenses out of pocket, this type of insurance can be a very good deal.  If you’re looking for a more comprehensive type of policy to protect you between jobs or until another policy becomes effective, you may be interested in a temporary health insurance policy instead.

How Much Does it Cost?

The exact price of the policy will depend on the provider and your own health situation, but in general you can expect a catastrophic health policy to be much cheaper than full-service health insurance like an HMO, PPO or POS plan.  Your odds of experiencing a catastrophic medical emergency while insured with this policy are low enough that insurers are willing to take a chance.

In exchange for the low monthly premiums, catastrophic insurance policies generally come with high deductibles.  Carrying this type of policy means that you must be willing to pay for the first $1,000 to $5,000 or more of your medical care after an emergency.  It also means that you’ll need to be willing to finance your own routine and non-emergency care.  The purpose of catastrophic health insurance is to provide protection from financially devastating medical emergencies, not to cover all health-related expenses.  A good companion to catastrophic coverage is the health savings account.

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