What You Need to Know About Catastrophic Health Insurance
Another, less common type of health insurance, aside from the HMO and PPO plans, is catastrophic health insurance. This type of health insurance has a high deductible, which means that insurance premium costs are kept low, but you pay more out of pocket when you must seek medical care. The basic understanding of the plan is that you will be responsible for paying for all medical costs until a certain pre-set dollar amount is met, then the policy would cover all further costs.
How Catastrophic Health Insurance Works
Pre-tax HSA money may be able to be combined with your catastrophic policy, thus providing a tax-free way to help defer the costs of some expenses. Because the HSA is a pre-tax account, you will be able to deduct the amount of your deposits on your taxes, which is an added benefit. This benefit is very attractive for many employees, especially those working for small businesses.
Since you will be responsible for any and all costs occurred up to your deductible, it is important that you realize the financial burden this could cause. It is a great idea, as long as you have an HSA account to put aside a certain amount of money each month to help pay until you reach your deductible. This may also be a viable option for consumers seeking basic medical coverage and those who do not have any current health ailments.
Catastrophic health insurance is also used as temporary insurance for students, newlyweds, and single young adults. After all, if you do not utilize the health insurance benefits, you will not need to pay the high deductible.
With catastrophic health insurance, the policy will likely have a cap, anywhere from $1 million to as high as $5 million that can be paid out towards benefits over the lifetime of the policy. A high lifetime cap is a good idea because as health care costs rise each year, the payout will be worth less.
Finding Catastrophic Health Insurance
To determine if catastrophic life insurance is right for you, please make it a point to talk to your California health insurance representative. Many times, it depends on whether or not you will be able to afford the deductible if you need medical care, which can be up to several thousands of dollars per year. This plan usually interests younger generations who are buying their own health insurance for the first time or people who have the means to pay for their own healthcare.