For videogame heroes, wrestling with catastrophe is a way of life. A good suit of armor, a stash of healing potions, and a sturdy shield is all you need to power through mayhem and save the day. When you're invincible, you can bring down an army of dragons without splitting a hair, but real life isn't so convenient. Since you can't press reset after a car wreck, or summon elfin magic to ward off the flu, you should consider getting yourself insured. If you're an adventurer on a budget, catastrophic insurance is a great way to shield yourself from the perils of everyday life.
What is catastrophic insurance?
Catastrophic health insurance is uniquely designed to cater to the needs of healthy young adults and is typically only available to people under the age of 30. A catastrophic plan is an emergency safety net, protecting you from unexpected medical costs, just in case that thing you thought would never happen to you, actually happens. Unlike traditional health insurance, catastrophic insurance only covers the bare minimum requirements of the Affordable Care Act. Because of this, these plans typically have both the lowest monthly premiums and the highest deductibles available. Nevertheless, if you're the type of person who rarely visits the doctor, a catastrophic insurance plan is a good way to save a little money and still be protected.
How does catastrophic insurance work?
Catastrophic plans are designed for people who rarely use their insurance. They offer low monthly premiums that are attractive to struggling 20-somethings. These plans are largely meant to protect you from high, unexpected medical costs associated with a serious illness or injury. The tradeoff for a lower monthly premium is a much higher deductible that will typically range around $6,000 for individuals and $13,000 for families. This means that you'll have to pay for most of your medical expenses until you reach your yearly deductible. Any costs that exceed the amount of your deductible will be covered by your insurance.
Catastrophic insurance may be minimalistic, but these plans do offer some perks. For instance; catastrophic plans must meet all of the minimum requirements of the Affordable Care Act. They cover all of the same essential benefits as conventional insurance and offers the same legal consumer protections. They provide prescription drugs, hospital care, mental health services, and your insurance can't be denied because of a preexisting condition. The only difference is that these services come at the cost of a higher deductible. Catastrophic plans will also pay for up to three doctor visits per year, as well as some preventive care, such as: screenings, immunizations, and alcohol abuse counseling. These services are fully paid by your insurance, even if you haven't met your deductible. So while catastrophic insurance is mostly for emergencies, you can still have three free check-ups just to be sure you truly are as mighty as you feel.
Your Best Option?
Interestingly enough, while catastrophic plans may have the lowest premiums they aren't always the best deal. If you buy your insurance from the government exchange, you can apply for financial assistance in the form of a federal subsidy. However, catastrophic plans aren't eligible for the subsidy program, regardless of your income. So if you're eligible for assistance, a bronze plan with a subsidy will probably be much cheaper than a catastrophic plan at full price.
Catastrophic plans are also ineligible for Health Savings Accounts. HSAs are tax advantaged savings accounts that allow you to save toward your deductible if you have a high deductible insurance plan. Once again, a bronze plan with an HSA that you, or your family can save towards might be a better deal than a catastrophic plan. Shop carefully and decide what kind of protection you need to cover the adventures of your life.
Why would you want catastrophic insurance?
Being young and healthy isn't the same as being invincible. No amount of Pilates and ginseng can prevent you from falling down those icy steps outside your dorm. In fact, young adults are especially prone to unintentional and accidental injuries, sports injuries, alcohol related injuries, and motor vehicle injuries. Stress related illnesses, depression, STDs, meningitis, influenza, strep throat, food poisoning and even athlete's foot are surprisingly common among college campuses. Not even the workplace is safe from the wrath of unexpected mayhem. Even if you're the type of person who hasn't seen a doctor since the day you left the NICU, catastrophic insurance is there to protect you if your life ever takes an unexpected twist.
Satisfying your legal obligations is another reason to consider catastrophic insurance. ObamaCare's individual mandate requires all Americans to have health insurance, whether they actually plan to use it or not. Additionally, most colleges and universities also require their students to be insured. While many schools offer their own insurance packages, student insurance is typically very expensive, with premiums averaging around $800. Thankfully, catastrophic insurance provides a low cost alternative for young adults who are only buying insurance to satisfy their school's requirements, or to simply avoid paying a tax penalty under the new law.
Who would benefit the most from catastrophic insurance? Thanks to ObamaCare, young adults finally have choices for affordable healthcare beyond invincibility and youthful enthusiasm. Now, adults under the age of 26 have the option of staying on their parent's insurance. More employers are offering insurance; Medicaid has been expanded in some states to include struggling young adults; and thanks to the help of government subsidies, insurance premiums are cheaper than ever. Not all 20-sometimes are eligible for these benefits however.
Catastrophic insurance is there to protect young adults who have aged out of, or who simply don't have access to their parent's insurance. It's there for young adults whose income falls below the requirements to qualify for a federal subsidy. It's there for young adults who live in states that refused to expand Medicaid. Simply put, it's there to provide an affordable option for people who aren't eligible for other forms of assistance. Catastrophic plans are also a good match for healthy young adults who, in all likelihood, won't actually use their insurance. If you happen to have a chronic illness, need regular prescription drugs, need regular dental care, or wear prescription glasses, a bronze plan with a higher deducible and more comprehensive coverage would be a better buy.
For people over 30 who qualify for a 'hardship exemption,' catastrophic insurance can provide affordable emergency coverage during times of crisis. Hardship exemptions are available for people are ineligible for other forms of assistance, and who have experienced an unexpected life event such as: a natural disaster, foreclosure, bankruptcy, or suddenly having to care for an aging family member. If you need a hardship exemption, you can apply at healthcare.gov.
So take heed young adventurer, as you embark on your journey into the wilds of adult life. The real world is rife with peril and at some point you may need more than your keen wit and your invulnerable might to see it through. If you want to be a champion of real life, get insured. You may not save a world, but you just might end up saving yourself and the ones you love.