Question: Is Catastrophic Health Coverage Right For Me?
Answer: People wanting to save money on their health insurance premiums often consider catastrophic coverage as an option. Catastrophic coverage is a type of health insurance that is designed to cover only the biggest health care expenses. Because it does not pay for smaller medical expenses like doctor visits, premiums for this type of coverage are often significantly lower than for a traditional comprehensive health insurance policy. However, in exchange for these lower premiums, should the consumer become ill, he or she must be prepared to pay thousands of dollars out-of-pocket to meet their policy's deductible and annual out-of-pocket maximum costs.
Catastrophic coverage may be a good option for you if:
- You are in good health. If you feel confident that your healthcare expenses this year will be minimal, catastrophic coverage may help save you money.
- You are uninsured. Catastrophic coverage may not offer as much as a more comprehensive plan, but it beats going without insurance at all. There are no guarantees in life, and sometimes accidents and illness are unpreventable and unpredictable. Catastrophic coverage may save you from financial ruin if you are diagnosed with a serious illness or get into an accident.
- You are financially comfortable and have some money in savings. If you have a catastrophic health insurance policy and you become ill, you must be ready to pay for some or all of your care out-of-pocket.
- You are comfortable with a little risk. As mentioned above, life can be full of surprises. If you are diagnosed with a chronic health condition while you have catastrophic health insurance coverage, you may owe more out-of-pocket than you anticipated. You may also find it difficult to switch to more comprehensive coverage if you are diagnosed with a chronic illness while on a catastrophic plan.
Catastrophic coverage may not be a good option for you if:
- You have a pre-existing medical condition, especially one that requires ongoing care. The amount of out-of-pocket spending required by catastrophic plans may be too much of a burden for people with pre-existing conditions to bear.
- You do not have much money saved for emergencies. Catastrophic coverage will not kick in until you have met your deductible, and coverage will be limited until you have exceeded the annual out-of-pocket maximum. This means you could be responsible for thousands of dollars in medical expenses. If you are not ready to meet this expense, catastrophic coverage may not be right for you.
- You are uncomfortable with risk. Some people find that catastrophic coverage does not offer much peace of mind because they are still liable for thousands of dollars in medical expenses if they become ill. These individuals may be more comfortable with comprehensive health insurance coverage.
If you do decide you want catastrophic coverage, be sure you know exactly how much you will be responsible for paying each year before you buy. Be prepared and have that amount of money available, just in case. Sometimes, even people who have never been sick a day in their lives fall ill.
