Catastrophic health insurance plans can refer to a variety of different insurance products. It can mean a high deductible plan or a major medical plan. Some specialty plans are also occasionally called catastrophic insurance plans. All of these types of policies can be purchased individually or as part of another plan.
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Rising insurance costs have made catastrophic health insurance products an attractive option to many people. Understanding what these products are and how they work will help you make an informed decision as to whether or not they are right for you.
There are several articles and websites full of helpful information on how to choose a health insurance plan. MSNBC Today has a featured article which gives you six tips on how to find the right policy. It includes making a list of priorities of coverage needed. You should also look at savings plans to cover out of pocket expenses, and using a broker or asking insurance companies for a free trial period.
What are high deductible catastrophic health insurance plans?
High deductible plans are health insurance plans that pay for covered medical services after you meet your annual deductible. They tend to have lower health insurance premiums than most other plans on the market. The downside is you will pay for all your medical care yourself until the deductible is met.
Many companies will offer a health savings plan with their high deductible policies. Health savings plans help policy holders save money to pay for medical expenses they incur before meeting the deductible. You have the freedom to choose who you receive care from and what treatments you receive.
Families USA is a non-profit organization dedicated to helping consumers understand their health insurance options. They recommend considering a few points before choosing a high deductible catastrophic plan:
- what medical expenses will be covered under your policy
- what percentage of your medical expenses the health insurance company will pay
- you need enough money to pay your own medical bills till the deductible is met
- you need enough money to cover the copayments and/or prescription medication
How do major medical catastrophic plans work?
Major medical health insurance plans are one of the most common types of catastrophic insurance. A major medical plan works similarly to a high deductible health plan. There is some confusion on many websites as to what major medical plans are and what they cover.
Major medical polices are not the same as comprehensive policies such as HMO health insurance policies and PPO health insurance policies even though they are sometimes referred to as major medical. This is because major medical catastrophic plans are usually included as part of a comprehensive plan. They can also be purchased separately or combined with a health savings plan.
Major medical insurance policies only pay for major illnesses or accidents. They will help with hospital stays, surgeries, and treatments related to covered illnesses or accidents. It will not cover minor illness, doctors’ visits, or routine care.
If you have a major medical health insurance policy, you will also have a high deductible to meet before the plan coverage kicks in. Only expenses related to covered health care can be applied to the deductible.
What other types of supplemental catastrophic coverage plans are available?
Most health insurance companies lump all of their supplemental health insurance plans under the label of catastrophic health insurance. That is because most of these plans are designed to cover major illness that could leave you with high medical bills.
You can find policies that cover cancer, heart disease, and stoke. There are also critical care policies that will cover all three under one policy. These policies can be a great benefit if you have risk factors such as a family history of one of these diseases.
A catastrophic health insurance policy will have low premiums and start to pay out once you are diagnosed. They can pay out a lump sum or over time. Live Strong published an article that explains that these types of policies help you with more than just medical bills. Since benefits are paid directly to the policy holder, the money can be used for living expenses also.
You will not be able to purchase these types of policies if you have ever been diagnosed with the covered illness. The downside is they are very specific, if you never need the policy then the premiums are wasted. You need to carefully weigh the pros and cons of these policies with your unique situation.
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