How catastrophic health insurance works
Catastrophic health insurance is a special type of coverage open to people under 30 and those eligible for income under the Affordable Care Act (ACA). Let's take a look at how it works, who qualifies, what it covers and how much it costs.
Eligibility
First, you must live in a state where catastrophic plans are available. Of the states that offer catastrophic plans, some have many options and some have few.
Second, you must qualify. The ACA restricts who is allowed to buy catastrophic health insurance for people under age 30 and people of any age who have a hardship exemption. A hardship exemption means you can get by without health insurance and not pay the individual mandate penalty because you're homeless, you've been evicted, or you've filed for bankruptcy in the last six months, you've been court-ordered, or you're in one of the other government-approved circumstances that pose a serious financial and/or personal hardship. Unemployment, for example, is not enough to qualify for a hardship exemption. (For more information, see Affordable Health Insurance for Students .)
You must apply for and be approved for a hardship exemption, and the exemption usually only lasts a few months. (You are not required to buy catastrophic insurance if you have a hardship exemption, but you will be taking a big risk with your health and finances if you go without coverage at all. If you're younger than 30 and don You don't have a hardship exemption because a catastrophic plan will make you pay the penalty as it counts as minimum coverage.
Cost
Catastrophic health insurance plans have lower premiums than most market plans and the highest deductibles around.Plans can be PPOs or HMOs, and premiums vary by insurance company and location.In Missouri, for example, a 24-year-old would pay nearly $200 per month While in Florida, costs can range from $170 to $256, and in Arizona catastrophic premiums range from $151 to $180. The deductible in 2016 is typically $6, 850 for an individual and $13, 700 for a family. Plan, you will not be able to take advantage of any health insurance premium tax benefits you may be entitled to on your income. The out-of-pocket maximum is often the same as the deductible. If it is, you will never pay coinsurance. You will pay your expenses out of your own pocket until you reach the deductible of 6, 850 euros, then your expenses will be 100% covered. (For more information, see Tips for Finding Affordable Health Insurance .)
Another benefit of catastrophic coverage is that you receive your insurance company's negotiated rate (also known as an allowed charge) for medical services. which is often lower than the actual rate of the provider.For example, if you didn't have insurance, a doctor might charge you $125 for an office visit. If you have insurance and your insurer has negotiated a $100 office visit fee with this provider, you only pay $100. Don't take the risk of not being insured. (For more information, see Do you need short-term health insurance?? )
Insurance coverage
Before you meet your deductible, get 100% coverage for in-network preventive care. These services include three visits per year for your primary care physician and various screenings, immunizations and other services depending on age, gender, health history and current health status. For example, pregnant women receive 100% coverage for anemia screenings, folic acid supplements, gestational diabetes screenings, and more.
Catastrophic plans also cover the 10 essential health benefits required under Obamacare, including emergency services, hospitalization, lab services, and prescription drugs, although these are subject to your deductible, which means you pay for them out of pocket until you get yours deductible. As with other ACA-compliant health insurance plans, you'll be approved for a catastrophic plan regardless of your health status, and you won't be charged extra if you're sick.
If you're eligible for a catastrophic plan because you're under 30, you can buy a plan through the exchange or outside of it. (For more information, see Buying Private Health Insurance .) If you qualify for a hardship exemption, you must purchase your plan through the Marketplace.
The Bottom Line
If it's a bad year for your health, you'll be glad you have catastrophic health insurance; It will limit your damage to $6, 850 for an individual plan or $13, 700 for a family plan. Otherwise, you're unlikely to be hit with a catastrophic plan, even if you end up with a tax-free penalty on your taxes (see Obamacare Penalty Enforcement: How It Works ). But on the other hand, you'll only pay around $200 a month for health insurance instead of a much higher monthly premium. And you'll have peace of mind – as will any other family members who end up having to pick up the pieces if you become seriously ill or injured in a serious accident. (For more information, see Reducing the Cost of Marketplace Health Insurance .)
Before you sign on the dotted line, however, be aware of how you would go through with a deductible regular plan. The market for health insurance. Then you'll know which is the better deal for you this year.