Is catastrophic health insurance allowed under Obamacare?
“To sum it up…”
- Most people are not eligible to purchase a catastrophic plan through the Healthcare Marketplace
- However, you may be eligible for a catastrophic plan if you are under 30 or qualify for a hardship or affordability exemption
- Catastrophic plans have very low monthly premiums and very high deductibles and are really only meant to help with healthcare costs in extreme cases
- Catastrophic plans still cover preventive services at no cost and the essential health benefits under the Affordable Care Act
What is a catastrophic health plan?
A catastrophic health plan is a health plan with lower monthly premiums but extremely high deductibles. They are meant to cover healthcare costs in the case of an emergency, such as a severe illness or tragic accident. However, you will have to pay for most of your routine healthcare costs out of pocket.
Not everyone is eligible for catastrophic coverage. You either have to be under the age of 30 or be eligible for a hardship or affordability exemption under the Affordable Care Act.
Catastrophic plans do meet the minimum essential coverage requirements for those who qualify.
Catastrophic plans cover the essential health benefits under the Affordable Care Act. They cover preventive services at no cost to you and will cover three visits to your primary care doctor in one year even before you have met your deductible.
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What is minimum essential coverage?
Minimum essential coverage refers to health insurance plans that meet the standards set forth by the Affordable Care Act. Most employer-based plans and plans purchased on the Healthcare Exchange Marketplace meet these minimum essential coverage requirements, as do many government-funded programs such as Medicaid and the Children’s Health Insurance Program.
There are a few types of health insurance plans that do not meet the minimum essential coverage requirements. These include short-term plans, some supplemental Medicare plans, vision and dental only plans, and limited benefit plans.
Catastrophic plans are generally the cheapest plan you can purchase that still meet these requirements. However, it is important to keep in mind that these plans might not cover your typical medical expenses.
What is a hardship or affordability exemption?
If you are over the age of 30, you might still be eligible for catastrophic plans, if you qualify for a hardship exemption under the Affordable Care Act. There are several types of hardship exemptions but you will need to fill out an application for all of them.
Some life events that might qualify you for a hardship exemption include homelessness, experiencing domestic violence, facing eviction or foreclosure, filing for bankruptcy, and damage to your property due to a flood, fire, or another type of natural disaster. If you had medical expenses you were unable to pay or received a shut-off notice from your utility company, you might also be eligible for a hardship exemption.
Each of these circumstances may require a different application for in order to be eligible for catastrophic insurance or an exemption from the individual mandate penalty fine.
You are not required to purchase a catastrophic plan or any plan if you qualify for a hardship exemption. Catastrophic plans are just one lower cost option that can help you in case of a medical emergency.
To browse through and purchase catastrophic plans, type in your exemption certificate number on the Healthcare Exchange Marketplace website. Your exemption certificate number should be located on your eligibility notice. I
f you are purchasing an insurance plan through a private insurer, you can still get a catastrophic plan if you are eligible. You will just have to give your exemption certificate number to the broker.
If you choose not to purchase a plan at all, keep in mind that your hardship exemption might only cover the month before the hardship, the months of the event, and the month after. In some cases, the hardship exemption may last an entire year. After this, you will need to purchase a healthcare plan or have to pay the individual mandate penalty fine.
How much do catastrophic plans cost?
Monthly premiums for catastrophic plans vary, but they are typically very low. If you are eligible for premium tax credits based on your income level, you cannot apply these to a catastrophic plan. In this case, using your tax credits for a bronze or silver level plan on the Marketplace might actually offer you a better value. It is important to look through all of your options before choosing a healthcare plan.
Catastrophic plan deductibles are extremely high. A deductible is the amount of money you have to pay for medical services out-of-pocket before your health insurance will kick in and begin to cover your expenses.
In 2017, the deductible for catastrophic plans is $7,150. This is much more than a Bronze, Silver, Gold, or platinum plan on the Healthcare Marketplace.
What if I am not eligible for a catastrophic plan?
If you are not eligible for a catastrophic plan, there are plenty of other affordable options that you can consider. If your income is close to 100 percent of the federal poverty level, you will qualify for tax credits on the healthcare exchange Marketplace that will make these options more affordable and provide you with comprehensive coverage.
Bronze plans typically offer the cheapest monthly premiums after catastrophic plans. However, they also have extremely high deductibles, as well. If you purchase a silver plan, you might also be able to save money through cost-sharing reductions on copayments and your deductible, in addition to premium tax credits.
These additional savings are only available on Silver plans which tend to have higher monthly premiums than catastrophic or Bronze plans. Silver plans often offer the greatest value for those who qualify for all of the available savings based on their income.
Is catastrophic health insurance allowed under Obamacare?
Catastrophic health insurance does meet the minimum essential coverage requirements under the Affordable Care Act. It is generally only available for purchase to those under the age of 30 and people who qualify for hardship exemptions.
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