What Is A Catastrophic Health Plan?

what is a catastrophic health plan? text overlaying image of a hand stacking building blocks with different health images on themHealth insurance can seem like a big expense, but the cost of a plan is nothing compared to the cost of a significant medical issue. That means it’s important to have at least some sort of coverage – but what if you’re struggling to find a plan that you can afford? 

 

In this case, you might want to look into catastrophic health insurance plans, which are designed to provide basic coverage for “just in case” scenarios, and which have affordable premiums. It’s important to note that these plans are not available to everyone, though. In order to purchase a catastrophic health plan, you must be under the age of 30 or meet the requirements for a “hardship” exemption.

 

Catastrophic plans are really only designed as last resort coverage, but they are a good option if you can’t afford another type of plan, because they will help you avoid a scenario in which you’re hit with a medical bill for thousands of dollars. The monthly premiums for these plans tend to be relatively low, but you will typically be required to pay for all of your healthcare expenses out-of-pocket until you reach the plan’s high annual deductible, which is typically at least a couple of thousand dollars. 

 

Below is an explanation of how catastrophic coverage works, along with its benefits and associated costs, as well as a look at whether this type of plan might be right for you. Once you’ve read through the following, contact an EZ agent with any questions you might have, and to get quotes on the right plan for you.

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What Do Catastrophic Health Plans Cover?

Catastrophic plans are like a financial safety net in case you end up incurring large medical bills that would be impossible to pay on your own. They also include coverage for the same preventive care benefits that all ACA-compliant plans offer. This includes coverage for the ACA’s 10 essential health benefits:

 

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Laboratory services
  • Mental health and substance use services
  • Pregnancy, maternity, and newborn care
  • Prescription medications
  • Preventative and wellness services and chronic disease management
  • Pediatric services
  • Rehabilitative and habilitative services

WIth a catastrophic plan, you will get most preventive care and up to three doctor visits a year fully covered. You will pay for most other covered services, like lab work and minor surgeries, out-of-pocket until you meet your plan’s high annual deductible. Once you meet your deductible, your catastrophic plan will pay for the rest of your essential health benefits for the rest of the year. 

 

A catastrophic health plan has a deductible that is so high that most people don’t meet it in a given year. These plan’s deductibles are the same as the federally mandated out-of-pocket maximums for healthcare plans, which for 2023 is $9,100.

 

The good thing is, though, with a catastrophic health plan, as with all health insurance plans, the amount you pay out-of-pocket for medical services will actually be less than if you didn’t have an insurance plan. This is because insurance companies typically negotiate reduced rates with healthcare providers. So, it’s always better to have a plan – even one with a high deductible – than no plan at all. 

What Isn’t Covered?

Because catastrophic plans have such high deductibles, they will most not likely not end up covering smaller medical expenses. Costs associated with medical services like treating a broken bone or minor illness, or seeing a specialist, will probably not meet your deductible, so your catastrophic plan will not begin covering your costs. 

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Who Are Catastrophic Plans For?

As mentioned above, these plans are only available to two categories of people. The first is young adults under 30 who don’t have other coverage options (such as through an employer or spouse). If you are in this category, you might consider getting one of these plans if you:

 

  • Are unlikely to need medical care throughout the year
  • Want to satisfy the legal requirements in your state for health insurance (if your state has a health insurance mandate) but don’t want to buy a more expensive plan
  • Want to have basic coverage in the event that something terrible does occur

Second, individuals 30 and over who qualify for what is known as “economic hardship,” and who don’t have access to healthcare through an employer or spouse, can also purchase catastrophic health plans. You may qualify for a hardship exemption if you:

 

  • Have experienced homelessness within the past three years
  • Were determined to be ineligible for Medicaid
  • Have experienced eviction
  • Have been the victim of domestic violence
  • Are filing for bankruptcy 

If you believe that your current economic situation makes it difficult for you to pay for health insurance and are interested in a catastrophic plan, you’ll have to submit an application for a hardship exemption through the Health Insurance Marketplace.

 

It is important to keep in mind that even if your income puts you in a position to receive reduced healthcare costs, also known as a subsidy, you will not be able to put those savings toward a catastrophic health plan. This includes tax credits for premiums, as well as subsidies for cost-sharing. That means that no matter your income, your monthly premiums for your catastrophic insurance plan will remain the same.

The Cost

A catastrophic health plan is essentially the same thing as a high deductible health plan but with a different name, and with restrictions on who can purchase them, as already discussed. Because they have such high deductibles, they can be quite expensive if you have a number of health problems. 

 

As of 2023, the annual deductible for individual catastrophic health plans is $9,100; for families, this doubles to $18,200. This means that you will most likely have to pay out-of-pocket for most smaller medical expenses, including lab work, minor surgery, or anything else other than preventive care.

 

The one good thing price-wise about these plans is that plans with high deductibles generally have relatively low premiums. So if you are healthy and don’t often see the doctor, the monthly cost might be worth it as coverage in case of an emergency, since a major medical event can be extremely expensive.

Pros of Catastrophic Health Plans

The following are some of the benefits of having a catastrophic health insurance plan:

 

  • In comparison to those of other types of health insurance, the monthly premiums are typically much more affordable.
  • Your coverage acts as a financial buffer, protecting you from the potentially catastrophic effects of a major illness or medical emergency.
  • If you are generally healthy and don’t require many medical services, you might find that your overall insurance and care costs are lower than they would be with either another plan or no plan at all.
  • Insurance companies typically negotiate lower rates for services with healthcare providers, so your out-of-pocket costs for care could be lower with a plan than they would be without one.

When determining whether or not a catastrophic plan is the best option for you, your current state of health is an important factor. If you are generally healthy, a catastrophic plan may be a good option. This is especially true if you have an emergency fund that can pay for any medical care you require up to the amount of your plan’s deductible.

Cons Of Catastrophic Health Plans

It’s important to note that catastrophic health insurance plans come with a number of significant drawbacks, including the following:

 

  • Because you will only be covered for preventative care, a limited number of visits to primary care providers, and the most expensive type of care, the benefits of your medical coverage will be severely limited.
  • Because your deductible will be very high, you will need to come up with a significant amount of money in the event that you require medical services, which can be a problem for a lot of people.
  • You will not be eligible for premium assistance through the Affordable Care Act (ACA).
  • You will not be able to open a health savings account (HSA), as you would be able to do with other qualified high-deductible health plans. With a health savings account (HSA), you can set aside money before it is taxed to use for medical expenses.

A catastrophic plan is not the best option for you if you are planning to have a baby or otherwise anticipate needing a significant amount of medical care during the course of the year.

 

Are Catastrophic Health Plans Worth It?

A catastrophic health insurance policy could be beneficial to have if you cannot obtain health insurance from another source. In this case, one of these plans will typically be the most cost-effective option, and it may be significantly less expensive than other available choices, such as COBRA coverage. A lot of people use this type of plan as a short-term solution for their emergency insurance needs.

 

It is most likely worthwhile to purchase a catastrophic insurance policy, since they have low premiums. Having one will protect you from incurring potentially bankrupting medical expenses in the event of an emergency or illness.

Working With EZ

If you find yourself in a bind, EZ.Insure is here to assist you. Our agents are incredibly knowledgeable. They can comb through all of the health insurance plans available in your area to find the right one for you. As quickly as possible and with no hassle to you. A personal agent will assist you in navigating the numerous coverage tiers and plan options available, and answer all of your questions. And the best part is that everything we do is totally free! To get your free quotes, simply enter your zip code into the space below. Or give us a call at 877-670-3557.

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How to Balance Health Insurance Costs

Health insurance is a necessity, but it can be a big expense for a lot of people. That means that some people go without it in order to “save” money. But going without insurance can backfire, and end up costing you a lot in medical bills. We get it, though, the cost of some insurance plans can be surprising, or seem out of reach – but we’re here to tell you that it is possible to find affordable health insurance without breaking the bank. The best way to get started balancing your healthcare costs is to understand your plan and know what your options are.

Get Familiar with Your Expenseshand holding a calculator with the word cost on it and a hospital room in the background

There are a lot of expenses associated with your health insurance plan, and you need to know what you’ll be paying for when it comes to your plan. Here’s a breakdown of what you should be looking at:

  • Premiums– The amount you pay monthly for your plan.
  • Deductible– The amount you have to pay before your insurance company begins to pay for services. For example, you might have a $5,000 deductible, meaning you’ll have to reach that amount in out-of-pocket healthcare expenses before your coverage kicks in.
  • Copay– A set dollar amount that you pay when you visit a healthcare provider or emergency room, or for prescription medications. For example, you might have to pay $20 upfront to see your primary care physician, $30 to see a specialist, etc. 
  • Coinsurance– The percentage of costs that you will have to pay after meeting your deductible. For example, some plans will require you to pay 20% of a covered service, meaning if your health insurance plans’ allowed amount for an office visit is $100, you’ll pay 20% of $100, or $20 (if you’ve already met your deductible).
  • Out-of-pocket maximum – Health insurance plans now have a maximum amount that you will have to pay out-of-pocket for your healthcare expenses, so if you reach that limit in a calendar year, your insurance company will begin to cover your services in full.

Once you know how much you are paying for each of these parts of your healthcare plan, you can do some comparison shopping, and make sure that you have the right plan for you.

Know How to Save

Even if you’ve got a plan that works for your budget, you can still find more ways to cut down on some of your healthcare expenses.  For example, there are ways to save in the following situations:

When You Are in an Emergency

If you have a minor medical emergency, stop and think before you go to the emergency room, since a visit to the ER can be very pricey. For things that aren’t serious, try a telemedicine visit with your primary care physician, or visiting urgent care instead of waiting for an in-person appointment, or heading to the emergency room and being hit with a big bill. Depending on the situation, telemedicine or urgent care could be sufficient, and cheaper, if the issue isn’t life-threatening.

When You Need Blood Work

hand in purple gloves holding tubes of blood
Before getting blood work done, make sure the place you go to is covered under your insurance plan!

If your doctor orders blood work, make sure you find out which lab your insurance company requires you to use. Each insurance plan will cover certain labs, and some plans might require a referral or prescription, while others will not. If you go to the wrong lab, you will be stuck with a big bill for going to an out-of-network provider.

When You Need Outpatient Care

If you have to have minor surgery or a minor procedure, such as an ACL repair or a colonoscopy, you can save money by going to an ambulatory surgery center instead of the hospital. These centers will conduct same-day surgeries that cost less and are more convenient. 

Know What You Need

What exactly are you looking for in a plan? Do you have a family you need to cover?  Do you have kids who play sports, who will require a little extra coverage? Or are you single and need the bare minimum for the what-ifs? Whatever the case may be, take the time to determine what kind of plan and coverage you need. With all of the subsidies now available, there is no better time to reconsider getting a health insurance plan, or to look at your current one to make sure it covers your needs. 

And if your plan doesn’t cover everything you need it to, it’s time to find a plan that does, so you can save as much money as possible. If you’re shopping for a plan, your best bet is to speak to a licensed EZ agent. Our agents work with the top-rated insurance companies in the nation, so we can compare plans in minutes. We will not only find a plan that has all the benefits you’re looking for, but we will also make sure the plan fits your budget. To get free instant quotes, simply enter your zip code in the bar above, or to speak to a local agent, call 888-350-1890. No obligation.

Unvaccinated? Be Prepared To Pay More For Health Insurance

While President Biden had a goal of getting 70% of Americans vaccinated by July 4th, the vaccination rate in the U.S. is still only around 60% for those ages 12 and up. That means we are currently unable to reach herd immunity; not only that, but the Delta variant of the virus is spreading rapidly, causing another wave of the pandemic, with hospitals in certain areas again being overwhelmed with Covid-19 patients. And despite many companies offering Americans incentives to get the vaccine, many unvaccinated people still won’t get the free shot – but refusing to roll up your sleeve could soon start affecting your wallet.

Growing Speculation

paper with the words risk assessment on the top and a pen on the paper
Just as health insurance companies can charge smokers more for being more risky, they can do the same for unvaccinated people.

Health insurance companies have always reserved the right to deny coverage to or charge more for people who partake in risky behavior, such as rock climbing or smoking – in fact, some insurance companies even charge tobacco users up to 50% more for plans than what nonsmokers pay. Now there is speculation that insurance companies might penalize those who are unvaccinated by charging them higher premiums.

What is the reasoning behind the surcharge? Insurance companies argue that an unvaccinated person not only risks getting sick themselves, but can also infect others, leading to expensive medical bills; to help cover those extra costs, insurance companies feel that unvaccinated people should pay higher premiums for engaging in what they see as risky behavior. Experts speculate that insurers haven’t started raising rates for unvaccinated people yet because the vaccine is still only authorized for emergency use and has not yet received full approval from the FDA. 

Employer Mandates

The low vaccination rates in some areas of the country are also causing problems for employers, and so many have been offering incentives to employees to encourage them to get vaccinated. On the other hand, some are considering penalizing employees, and are looking to charge them anywhere from $20-$50 more per paycheck for health insurance.

$20 dollar bill underneath a $50 bill
Employers can penalize unvaccinated employees by charging them $20-$50 more per paycheck for health insurance.

“Because of the emergence of the Delta variant and because vaccination levels have stalled out with employers, they’re trying to take some more ‘stick’-type measures rather than the incentive,” said Wade Symons, a partner at Mercer Health, a benefits consulting firm. “They’re looking for something that’s going to move the needle, and they’re looking at a surcharge as a potential option for that.” 

Employers see these measures as not just a way to get employees vaccinated, but a move to help them save money. “Unvaccinated individuals have potential to cost the employer more from a health care spend perspective,” Symons told CBS MoneyWatch. “They could get Covid and incur expensive hospital costs up to $50,000 for an individual with a tough Covid case.” 

Once the vaccine gains full approval from the FDA, employers can make the vaccine mandatory. 

Both health insurance companies and employers who contribute to health insurance premiums want to save money, so in a push to get more people vaccinated, the time will most likely come when they make people who refuse to get the vaccine pay more in premiums. As of now, surcharges are only being talked about, but once the vaccine gets fully approved, they could become reality.

Self-Employed? Here’s Your Guide To Getting Health Insurance

Nothing beats being your own boss! If you are self-employed, then you are probably wondering about your health insurance options. Don’t worry, you do not have to break the bank to get a plan for yourself. There are many affordable options.

silhouette of a man looking at a blackboard with 3 arrows pointing in different directions
When you are self-employed, you have different options for health insurance.

Health Insurance Coverage Options

Let’s talk about the options of health insurance for the self-employed. There are different routes to go when looking for the right plan.

  • Marketplace– If you work as a freelancer, run your own business, or self-employed without employees, then you qualify for the Individual Marketplace. There are a variety of different plans you can choose from, but you can only enroll during the annual Open Enrollment Period, unless you have a qualifying life event. When you fill out an application, you will find out if you qualify for premium tax credits and other savings, which we will further elaborate on later. 
  • Private Insurance– Private insurance has plans that provide good coverage at an affordable rate. Private insurance companies have many plans to choose from with a variety of coverage and costs. You can find a plan tailored to your needs and budget.
  • SHOP Marketplace– If you own a business and are looking for coverage for yourself, a spouse, or have an employee, then Small Business Health Options Program (SHOP) Marketplace is the way to go. Enrolling in a SHOP plan offers small business or non-profit a Small Business Health Care Tax Credit.

Marketplace Savingsafrican american hands holding a small white piggy bank

Now back to those savings we talked about earlier. When you fill out a health insurance Marketplace application, you will estimate your net self-employment income. The premium tax credit or reduction qualifications rely on the year you’re getting coverage, not the prior year’s income. You will have to estimate your household income for the year and submit it. During the year, you can change your estimated income if the income changes. 

If you qualify for the tax credit, you are allowed to deduct 100% of your health insurance premiums for your adjusted gross income every year. 

Tips On Choosing A Plan

caucasian woman n a sundress with a laptop on her lap and a notebook on the seat next to her.
Before choosing a plan, make sure to do some research, so you pick the best plan for your situation.

There are a lot of different plans you can choose from, both on the marketplace and through private health insurance companies. You can choose a high deductible plan with lower monthly premiums, and benefit from an HSA account. You can choose a low deductible plan with higher monthly premiums, or even a catastrophic plan. Whichever you choose, make sure to compare plans to choose the one that meets your needs and budget. 

Comparing plans and their prices can take a long time, and can be frustrating. The most important tip when choosing a health insurance plan is getting expert advice from an insurance agent. EZ.Insure offers highly trained and knowledgeable agents all around the U.S. that specialize in their region. You can speak to one of our agents, and they will do all the comparing of available plans for you and provide you with the quotes. It comes at no cost to you, which is a win! You get free help, and get directed in the right path to save money, double win! To speak to an agent by emailing replies@ez.insure, or calling 888-998-2027. No gimmicks, no hassle, and no cost. Just simple, free health insurance quotes.

Healthcare Rates to Rise in 2019

In 2017 when President Trump did away with cost-sharing subsidies, it forced insurers to raise premiums. The cost-sharing subsidies helped pay back insurers for giving customers lower premiums due to their income status. Due to the halt in the subsidies, health insurance premiums have been rising. Mainly for those who have to buy their own insurance, approximately 34% in 2018 for silver plans. Insurers are now brainstorming what they will charge and if they want to participate in the ACA exchanges for 2019.

Insurers have been participating less and less in the market exchange, leaving customers with fewer choices. If more insurance companies decide to pull out of the exchanges, it will mean that customers will have even fewer choices available to them, at higher costs.

Health Insurance rates are increasing next year
Health Insurance premiums and deductibles are increasing next year

Premium Increase

Premiums will continue to keep growing without the cost-sharing subsidies to help with the costs impacted on insurers. The hike in premiums could be as much as 30% for 2019. It is projected that those that will be impacted the most are those who make too much money to qualify for premium support subsidies.

Eyles and Ceci Connolly, president and CEO of Alliance of Community Health Plans both voiced their disappointment of Congress failing to take action to fund cost-sharing subsidies.

“What’s happened is that several pieces of the puzzle have been pulled away. It is hard for me to isolate CSRs, what we are looking at now is a puzzle that is falling apart piece by piece,” Connolly said. “Losing the individual mandate, losing the cost sharing reduction subsidies and losing any hint of reinsurance, not to mention the risk corridors that were already gone, you’re just running out of options to manage the cost of this program.”

Funding

Midterm elections are approaching which brings up the issue of health care. While both political parties will be criticized, the polls have shown that voters hold Republicans more responsible for the high costs. Both parties have come to an agreement to include health insurance funding in the spending law. However, they could not agree on the details of what to fund exactly. Republicans are pushing for abortion restrictions stating insurers can cover abortions but cannot use federal funding for them, while Democrats do not agree.

If the bill receives funding, then hopefully it will offset costs, making it affordable.
If the bill receives funding, then hopefully it will offset costs, making it affordable.

Lawmakers are hoping the stabilization effort of adding funding to the bill will offset the costs of insurance. Health-policy experts disagree on how much it will help. Health experts state that the higher premiums will be offset for people by other subsidies they will be qualified for.

Republicans are not thrilled to stand behind the idea of the stabilization funding. They view it as saving the insurers of the health law, ACA, which they promised voters they would repeal. They blame the ACA’s regulations which stopped competition and drove up premium costs.  Congress is leaning towards unlikely passing the stabilization bill.

Insurers are expected to announce the premium price hike sometime in the fall.