Catastrophic Health Insurance – Rates, Advantages, Disadvantages, and more.

If you’re employed in an organization that doesn’t offer health insurance or you can’t afford or don’t want a regular health plan, the best insurance policy for you would be a Catastrophic Health Insurance Plan.

Catastrophic Health Insurance plans are also known as High Deductible Health Plans (HDHP). These are plans that offer cover only when your medical expenses cross a certain amount. If your medical expenses aren’t that big enough, you will have to pay for all the expenses including hospitalization, drug costs, doctor visits, etc out of your own pocket.

The reason many people prefer a catastrophic health insurance plan is because of the following:

1. They perceive themselves to have a lower health risk than the general population. They believe that they are quite healthy and don’t need cover
2. They can’t afford a general insurance plan
3. They don’t prefer purchasing insurance at all but choose the catastrophic plan because they’ve realized that some insurance is better than none at all.

If you fall into any of the above mentioned three categories, a catastrophic health insurance plan would be the most ideal plan for you. These plans offer cover for various things such as:

- Hospitalization costs

- Surgery costs

- Intensive care

- Diagnostic tests and lab test costs

But you only get cover for the above mentioned when your expenses cross a threshold amount. The plan also includes a very high maximum benefit cap which is around $1 million and $5 million.

This means when your medical expenses exceed the threshold cap (i.e. maximum benefit cap), your insurance provider will stop paying your insurance bills and your coverage will be terminated.

Who can benefit from a catastrophic health insurance plan?

Not all people can benefit from a catastrophic insurance plan. These plans are designed keeping two unique demographics in mind. The two demographics are…

1. Young adults

Young adults in the age group of 18 – 30 that have no intention of raising a family immediately and do not have any potential health risks choose this plan because these plans are a lot more affordable whilst still offering cover for threatening medical conditions that can break the bank.

2. Old adults

Old adults in the age group of 50-60 who currently have no existing conditions and are quite healthy benefit the most from this plan. The main reason why they choose such an insurance plan is to protect themselves from serious health conditions that can cause financial strain such as heart attack, cancer, etc.

With that said, here are some important things you need to keep in mind before purchasing a catastrophic health insurance plan…

1. Evaluate yourself medically

Before you choose to get in touch with an insurance agent to purchase a catastrophic insurance plan, we strongly recommend that you perform a series of medical tests at a local hospital or health center that you trust. Make a thorough health check up and talk to the doctor about diseases that are most likely to affect you.

Depending on your genetics, age and your current health, you may be susceptible to certain kinds of diseases. Discover what kind of diseases you’re susceptible to and the medical costs you’ll encounter in the event of such a disease.

This will help you calculate the appropriate deductible you need. If you’re susceptible to medical conditions whose treatment costs would vary in the range of $5,000 – $20,000, there’s no point in buying a catastrophic insurance plan with a deductible of $25,000.

Such a plan will require you to pay for medical expenses under $25,000 from your own pocket. The insurance provider will only offer cover for you when the amount exceeds that.

So make sure that you evaluate yourself thoroughly. Take steps to prevent any of the diseases that you’re most likely to encounter.

2. Maternity cover

Most catastrophic insurance plans do not cover the medical costs of pregnancy or offer maternity cover. So if you think that you may become pregnant and will need maternity cover for a year, we recommend that you choose an alternative insurance plan. Catastrophic insurance plans aren’t ideal for people who are looking to get pregnant and raise a family.

If you’re still single and have no thought of raising a family for another 10 years, we recommend that you purchase a catastrophic plan now and opt for a general insurance plan later on depending on your situation.

But there are some catastrophic plans that may offer maternity cover as well. You’ll be able to find them if you shop around a bit.