What Is Catastrophic Health Insurance?
If you can’t afford to buy health insurance through your employer or from The Health Insurance Exchange, you may be able to buy a basic health plan covering essential health benefits for unexpected illnesses or accidents. It is designed to protect you from high out-of-pocket costs for a catastrophic health event. These plans are available at a lower premium and generally with a higher deductible.
What is covered?
A catastrophic insurance plan covers:
- Essential health benefits: ambulatory patient services, emergency services, pregnancy and maternity/newborn care, mental health/substance abuse, prescription drugs, rehabilitative services, laboratory services, preventive/wellness services, pediatric services.
- Additional benefits: birth control and breastfeeding coverage
- Some plans may offer dental or vision coverage based on your state’s requirements for minimum coverage.
- Preventive services: Shots, immunizations, screening tests including cancer/mammography. Screenings for women every 1 to 2 years for women over 40. (Check here for a full list of preventive services covered.)
- 3 primary care visits per year before you’ve met your deductible
The availability of catastrophic health insurance plans vary by insurance company and by state.
Who Needs Catastrophic Health Insurance?
A catastrophic health insurance plan is ideal for individuals who cannot afford a traditional health insurance plan but are looking for health coverage for emergency medical situations.
This type of coverage is also known as major medical insurance. If you do not go to the doctor on a regular basis, need a lower cost health insurance plan, or are not concerned about paying out-of-pocket for minor health expenses; then a catastrophic health insurance plan may be right for you.
Catastrophic Health Insurance and the Affordable Care Act
You can purchase a catastrophic health insurance plan through the Insurance Marketplace.
However, Affordable Care Act subsidiaries are not applicable to catastrophic health insurance. A catastrophic plan purchased on the marketplace is offered for lower premium and has a high deductible amount. While not as comprehensive as full medical coverage, it does offer some protection for expensive and unexpected medical expenses. You are eligible to purchase a catastrophic plan if you are under 30 or if you qualify for a special hardship exemption. You can complete a hardship exemption application to find out if you qualify.
If you qualify for a hardship exemption based on affordability, you can purchase a catastrophic health plan on the Insurance Marketplace. Some types of exemptions that are considered include hardship exemptions for homelessness, filing for bankruptcy, eviction/foreclosure or death of a family member. You can expect a catastrophic plan to cover all essential health benefits, preventive services at no cost and a minimum of three primary care visits per year before meeting your deductible. Find out if you qualify for a hardship exemption here. If you purchase a catastrophic health plan through the marketplace, it will fulfill the ACA’s minimum insurance requirement and save you from having to pay a tax penalty.
You can combine a catastrophic health care plan with a health savings account (HSA) which allows you to set aside tax-free money to apply towards medical care costs. The HSA could help you pay for the deductible, coinsurance and copayment charges of a catastrophic health insurance plan. For more information about health savings accounts and how they affect your federal income taxes, check out IRS Publication 969 for health savings accounts and other tax-favored health plans.
Considerations before Purchasing a Catastrophic Health Insurance Plan
There are a few things to keep in mind before deciding to purchase catastrophic health insurance. Your deductibles, copayments and coinsurance requirements will likely be higher than if you had a traditional health insurance plan. No ACA subsidiary payments are available to apply toward the premium for catastrophic health insurance plans.
If you can’t afford traditional health insurance through the marketplace or through your employer, catastrophic health insurance can give you some level of protection against an unexpected accident or illness and will also keep you from having to pay the tax penalty for not having health insurance. You can only buy catastrophic health insurance during the open enrollment period or a special enrollment period if you qualify. If you’d like more information about catastrophic health insurance plans, you can contact HealthCare.gov by calling 1-800-318-2596 or enter your zip code to find local help.