As per the Affordable Care Act, a catastrophic health plan is a new type of health plan available to people under 30-year of age, or those who qualify for a hardship exemption. The catastrophic health plans are designed to protect insured in a worst-case scenario. For instance, if any medical emergency occurs to a person and medical costs around thousands of dollars, then the catastrophic health plans can come to their rescue. These health insurance plans have low monthly premiums and very high deductibles and prove to be an affordable way to protect in worst-case scenarios like getting seriously sick or injured.
Catastrophic Plans Benefits and How it Works
Catastrophic health plans serve as financial protection, in case if insured have very high medical costs during the year. These plans include all the preventive care benefits that are covered by the ACA-complaint plans, along with three non-preventive office visits per year that are covered with copays. These plans also include emergency services, prescription drugs, etc. The only difference with a catastrophic plan is that the insured is required to pay for all their healthcare cost until they meet a high annual deductible. Once the out-of-pocket spending reaches the deductible amount, the plan will start paying for most of the covered health-care services. Though the deductible is not applicable for all benefits and the plan will cover the following benefits even if the yearly deductible is not yet met:
- Three primary care visits are covered every year
- Free preventive services that are covered under the Affordable Care Act, like some screenings and immunizations.
Besides these, the insured will require to pay the full cost for all other healthcare services until they meet their yearly deductible. In catastrophic plans, monthly premiums are lower and other cost-sharing expenses like copayments and coinsurance are generally higher compared to other plans. Catastrophic health plans cover the same essential health benefits just like any major medical plans, once the yearly deductible is met by the insured.
The deductible on a catastrophic plan is quite high, which most of the enrollees are not able to meet in a given year. The deductible of this plan is equal to the annual out-of-pocket maximum, and for 2020 health plans, it is $8,150. There is no coinsurance on catastrophic plans and once the enrollees hit the deductible, the plan will start paying for 100% of the covered services for the rest of the year. So, if enrollees have very high medical costs in a year, then their catastrophic plan comes into play and starts paying healthcare expenses. With rising healthcare costs racking up more than $8,150 in medical costs is easier, especially with inpatient hospital care and with a lot of outpatient procedures.
Enrollment in a Catastrophic Health Plan
Individuals are required to meet the following eligibility requirements to enroll in a catastrophic health plan:
- They should be under 30 years of age
- They should qualify for a hardship exemption, which is a situation that prevents people from being able to afford health coverage. Examples of hardship exemptions include individuals who are homeless in the last three years, Individuals who didn’t qualify for Medicaid because their state did not expand its Medicaid program. Individuals who think they will qualify for an exemption due to financial hardship, need to apply for a hardship exemption through the marketplace. Individuals need to keep in mind that if they qualify for lower healthcare costs or subsidy based on their income, they cannot apply this subsidy towards a catastrophic health plan. They will require to pay the standard premium amount for the catastrophic health plan, regardless of their income level.
Ideal Candidates of Catastrophic Health Plans
Catastrophic health plans are ideal in the following circumstances:
- Individuals who cannot afford expensive health coverage and prefer plans of lower premiums.
- Healthy individuals who rarely see a doctor.
- Individuals who can afford high out-of-pocket costs.
- Individuals who want to be prepared for high medical bills in a worst-case scenario
- Individuals who don’t qualify for Medicaid.
- Individuals who don’t qualify for a subsidy based on their income.
Every situation is different, and you’ll have to carefully consider your health needs, budget and priorities to determine what’s best for you. If you have questions about catastrophic coverage or other plan options, feel free to contact eHealth to discuss your needs with a licensed insurance agent.
Catastrophic Plan is Different from Other Plans
The catastrophic health plan is different from other plans like an accident, critical illness, or short-term plans. These health plans provide coverage to protect the policyholder in specific, limited situations like critical illness plans protect the policyholder against specific health illnesses, and short-term plans provide temporary and limited coverage when an individual is not eligible for any major medical health plan. Catastrophic health plan offers coverage in times of emergencies as well as coverage for preventive care. These plans come with low monthly premiums and a high deductible.