Catastrophic insurance, once the health insurance of last resort for college students,
independent young people, the perennially cheap (or risky), and low income, has in recent
times because more and more the option of necessity for many to retain any kind of health
coverage at all. The reasons vary, but much of this shift has had to do with the economy
and a significant number of Americans losing their full-time employment with health
coverage. The migration of so many to part-time work, or full-time work via cobbled
together various part-time jobs has created a need for very affordable insurance with life-
threatening coverage only.Along with cutting out frills, clothes, extras, and no longer
spending on credit cards, Americans have also been trimming down their health coverage
costs, increasingly looking at catastrophic coverage as the safety net it truly is.
What is Catastrophic Insurance?
These types of plans are designed by health insurance companies to capture business at
the low end of the market. In many cases, customers are unable to afford the full cost of
regular health care with appointments, full pharmacy coverage, clinic visits, etc. All they can afford is serious
emergency care for immediate health situations such as heart attacks, car accidents, wounds and trauma, and
similar. These types of plans are the true definition of a last report safety net just above leaving your fate to the
local county hospital emergency room for the indigent. The difference, however, is that you do receive treatment
whereas in some cases hospitals may just refuse to admit indigents who have no apparent means of payment.
Health insurance companies calculate the cost of the plan based on a large pool of applicants so that any expenses
that do occur are spread out. The insurance company bets that for the most part most of the applicants will stay
healthy enough not to need coverage at all. Thus the premiums paid are a 100 percent profit or close to it after
marketing and administration. In those instances were a cost does occur, the plan is limited to the immediate need
and usually does not include long-term care or treatment or rehabilitation costs.
Catastrophic plans generally include coverage of the immediate hospital services,
surgical activities for necessary procedures, intensive care unit treatment, lab and test
procedures to determine conditions and related medical needs. Typical doctor visitations
or long-term treatment procedures are not included. These plans also tend to include a
high deductible to keep their monthly premium affordable. It is very common for
catastrophic insurance to require the patient to pay the first $1,000 or $2,000 of services
before the plan coverage kicks in. Once in plan, the catastrophic cost ceiling can be as
much as $1 million to $3 million, depending on the plan; however, again this coverage is
only for the immediate care, not subsequent needs such as rehabilitation after the fact.
Catastrophic insurance should never be confused as a coverage option for chronic
conditions. Whether it be for ongoing mental conditions or kidney dialysis or diabetes, these plans do not provide
coverage support for ongoing medical needs.