Catastrophic health insurance covers you in the event of a major medical event.
Catastrophic health insurance is also called major medical coverage. Its purpose is to cover catastrophic health issues, such as cancer, heart attack and severe injury. While these types of plans have higher deductibles, the monthly payments are lower. If purchasing comprehensive health coverage is not financially viable, a catastrophic health plan will cover you in the event of a major medical event.
Purpose
Catastrophic health insurance is meant to be an affordable alternative for people who are unable to afford regular insurance. It does not cover routine medical examinations or prescriptions. However, it does cover hospital stays, X-rays and other major costs due to severe, medically traumatic events. Monthly premiums might be as low as $20 per month. However, the deductibles are higher, often between $500 to $15,000 before coverage starts. After you pay the deductible, the insurance kicks in and covers the rest of your expenses. Individuals with pre-existing conditions might not be eligible for this type of coverage.
Health Savings Plan
When you have a catastrophic health insurance plan, it is a good idea to have a health savings plan (HSA) in place. HSAs are tax deductible if they are set up properly. HSAs were established in 2003 in response to a movement toward more consumer-based health care. You must have a high-deductible catastrophic health insurance plan to qualify for an HSA. Your plan must also meet certain requirements before you can set up an HSA. For example, MayoClinic.com asserts you must be under 65 with a high-deductible plan to qualify for an HSA. The Internal Revenue Service has HSA contribution limits that may change from year to year. As of 2011, an individual may contribute up to $3,500 per year.
Coverage
Catastrophic health insurance coverage varies widely from plan to plan. Some cover preventive costs, such as mammograms, while others do not. Routine care in certain situations might also be covered. The greater the coverage, the higher the monthly premium. It is important, therefore, that you read the insurance provider's terms and conditions to fully understand what the insurance covers.
Things to Consider
Young people tend to prefer catastrophic health insurance plans because of the low premiums and their low risk of health issues. Other people choose a high-deductible plan because they cannot afford a comprehensive medical plan. If you are not prone to illness and have little need to see a physician, you might benefit from a high-deductible health insurance plan. If you suffer a sudden and severe illness or injury, you are liable for a large portion of the bill before your insurance activates. Some plans have a cap on coverage of between $1 million to $5 million. If your medical costs exceed these limits, the insurance company will not pay any more and may terminate your policy.
Tags: health insurance, catastrophic health, health insurance plan, insurance plan, major medical, Catastrophic health
