| Formerly branded as High Deductible Health Plans | | | | (which could be as a high as, say, $4,000 a year). |
| (HDHPs), Catastrophic Health Insurance plans were | | | | Consequently, if the goal is saving money, one really |
| initiated with the sole aim of providing overall medical | | | | needs to carefully and responsibly consider the |
| costs at a reduced monthly premium in lieu of a higher | | | | likelihood of needing routine care vs. the likelihood of |
| annual health insurance deductible in the United States. | | | | needing a very expensive treatment. In a specific set |
| These plans are the cheapest of all health insurance | | | | of scenarios, it might prove to be cheaper, but in |
| plans, and for a reason: a policy holder of a | | | | others, it would not. Either way, the policy holder takes |
| catastrophic health insurance plan would pay for all | | | | on more risk since he essentially 'gambles' that the |
| medical care until he reaches the annual deductible | | | | annual costs of his medical treatments would be |
| amount, which tends to be high or even very high. Only | | | | significantly lower than his annual deductibles; |
| afterward, his health insurance coverage begins and | | | | otherwise, there would be no incentive for him to take |
| his insurance would begin paying for his medical | | | | this plan, since he'd end up both paying for his medical |
| expenses. | | | | bills and paying monthly premiums (albeit cheap ones). |
| What does a Catastrophic Health Insurance Plan | | | | Is this plan for you? |
| covers? | | | | This plan is probably suitable for people who don't |
| Historically, these plans didn't cover routine medical | | | | believe they will require a lot of medical treatments, but |
| care and that is why were called 'catastrophic'; they | | | | want to insure themselves against the situation where |
| were truly intended for extreme scenarios. | | | | an extreme situation occurs, and they will be faced |
| Consequently, they normally required lower monthly | | | | with enormous bills. For some people, this might be a |
| premiums and high annual deductibles. That being said, | | | | wise course of action. Either way, as stated, one |
| many modern catastrophic health insurance plans offer | | | | needs to carefully weigh the pros and cons before |
| routine care and even prescriptions (in other words, | | | | selecting this plan; the worst case financial scenario is |
| non-catastrophic care); as a general guideline, the more | | | | that one just reaches his annual deductible, meaning, he |
| the plan covers, the higher the premium - however, | | | | pays his entire medical bills on his own, and yet still has |
| paying more out of pocket, results in lower monthly | | | | to pay the monthly premiums to the insurance |
| premium. | | | | company. |
| Note that these plans tend to have a lifetime maximum | | | | According to health statistics, the people who pick this |
| benefit, also called a 'cap' which is somewhere | | | | plan tend to be split into two groups: a group of young |
| between $1,000,000 and $3,000,000. After reaching this | | | | people who tend not to incur a lot of medical |
| cap, the insurance company no longer pays any | | | | expenses because they are healthy, and thus, can |
| additional costs. | | | | afford to carry on this risk; and conversely, a group of |
| When do you need a Catastrophic Health Insurance | | | | people close to retirement age - and yet still not eligible |
| Plan? | | | | for Medicare benefits - that can easily afford to pay |
| As the name suggests, these plans were historically a | | | | most medical costs, but would not be able to afford |
| targeted towards people who were not too | | | | treatments for serious conditions (such as extremely |
| concerned with routine care, or at the very least, could | | | | expensive cancer treatments). |
| afford to pay it, but wanted to protect themselves | | | | Note that some individuals aren't qualified to enroll on |
| from a situation where they would need a very | | | | an individual catastrophic health insurance plan, for |
| expensive treatment (a 'catastrophic' scenario), which | | | | example, people with certain pre-existing conditions |
| then their insurance would pay for. So for example, a | | | | such as AIDS or diabetes. However, they can be |
| man could pay for all his doctors' visits on his own, but | | | | covered under a group plan - though they may be |
| still have the insurance pay for costs of the expensive | | | | subject to wait a certain period of time, depending on |
| surgery he needs after he reached his high deductible | | | | the policy. |