If you’re a young adult who doubts that you’ll need health insurance, a “catastrophic” health plan may be for you. These are plans in which each year you (the insured person) must pay all of your medical costs up to a certain amount – usually several thousand dollars. But after that, if you have more expense, the insurance company pays the costs for your essential care.
The big advantages: lower premiums and protection from the truly disastrous costs of a serious health problem.
BONUS: If you buy your catastrophic health plan in the new Health Insurance Marketplace, it will also pay for preventive care, including ordinary vaccinations, screening tests, and regular check-ups.
Disadvantage: if your income qualifies you for help paying premiums or out of pocket costs, you will not get that help if you buy a catastrophic plan. Many people with lower incomes will be better off with a regular plan rather than a catastrophic plan, since premiums will be reduced and coverage will be better for the costs of ordinary illnesses or injuries.
If you are under 30, a catastrophic plan will meet your requirement to carry health insurance. People over 30 may be able to purchase a catastrophic plan in the Marketplace if their income is so low that they are exempt from the requirement (hardship exemption).
Catastrophic health insurance can be a good choice for healthy people who are willing to cover the cost of “ordinary” health care needs, but who want to be protected from the cost of major health problems which could be financially disastrous.