Catastrophic Health Insurance: Is it for you? Author:    Posted under: Health InsuranceHealth Insurance questions answeredHealth Insurance Types

The biggest cause for worry for any person at this time of economic crisis is how to budget the income per month to meet all of the family’s needs.  In reality, we recognize the importance of having to insure ourselves against any unforeseen events.  However, if we are on a financial crunch, we would automatically think of striking through the need of paying for an insurance plan whose benefits may not exactly be tangible for us at the moment.  Luckily, there is what we call catastrophic health insurance or high deductible health plans (HDHP).

HDHPs are a form of insurance with very low monthly rates.  It basically relies on high deductibles, so that you only need to pay a cheap amount per month for your coverage.  High deductibles only mean that you will have to have out-of-pocket expenses reach a certain amount before the insurance covers your treatment and care.  You are covered for most medical needs such as x-rays, doctor’s visits, and hospital confinement, but again you would have to reach your deductible before they do so.  This kind of plan also eliminates maternity and mental health care.  Companies mostly reject those with pre-existing illnesses, and this is one way of keeping their costs down.

Advantages. If something catastrophic happens, and you are not insured, you then would have to scurry around to look for enough funds to answer for your hospital expenses.  Since these bills do not come cheap, you will now be in deep debt or become bankrupt since you shelled out all of your money for the incident.  But, if you have this kind of health insurance, you can be sure that you are covered for large medical expenses.  This eases the biggest worry that you may have.

Since the monthly payments are low, you can very well afford to pay them.  Even if there are high deductibles, you would not need to shell out any money if you are healthy, and won’t need any prescriptions, or office visits.

You also get to qualify for a Health Savings Account (HSA).  HSA comes with enrolling yourself in a catastrophic insurance plan.  This allows for you to deposit money into this account, and may be used for medical expenses in the future.  The good thing about it is that the funds will stay with you even when your insurance ends.

Disadvantages. The disadvantage of having a catastrophic insurance plan may really depend on the age of the person getting it.  For healthy young people, it may work to their advantage as they would not really need much medical care.  However, for middle-aged individuals, who would need frequent medical visits and tests done, it may do their pockets more harm than good.  Essentially, they will be paying for these services first before the company would shell out any money for them.  Getting this type of insurance plan means that you are ready to shell out a certain amount from your own pocket in order for you to be able to experience the full benefit of your insurance coverage.

The bottom line is that you have to know what you need at this point in time.  Perhaps asking yourself the following questions will simplify things for you:

  • Do you find yourself needing medical attention most of the time?
  • Do you need medical treatment and prescription drugs on a regular basis?
  • Can you afford to pay out-of-pocket expenses for medical needs?

If you do need medical care, treatment, and drugs, then this plan is not for you.  Make sure that you assess your medical needs at this point in time, as well as your financial capability.  Not having the money to readily pay for your medical expenses also increases the burden on your shoulders, so be very careful about agreeing to pay deductibles if you cannot afford to do so.



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