Catastrophic Insurance - Definition
A brief guide to Catastrophic Health Insurance - What it is, typical benefits, and finding coverage.
Is a catastrophic health insurance policy right for you?
You may young, in your twenties, and as healthy as you've ever been. Or maybe you're the type who just never gets sick. You've
been blessed with great health, and germs just don't get you down. So why pay big bucks for a health insurance policy when you
never use it?
Unfortunately, just because you may be gifted with great health now doesn't mean the rest of the world will automatically conform
to your situation. Something as unexpected or simple as a car accident can turn your life upside down in seconds, wrecking your
health and causing serious, significant injuries that can cost thousands of dollars to repair and heal. For both those who don't need
it and those who only need a low-cost safety net, a catastrophic insurance policy is designed to address this demand.
A catastrophic illness or injury is one that is never planned or expected. Whether it be from a sudden onslaught of a rare bacterial
infection to tripping on sidewalk ice and breaking a leg, the sudden health risk always comes as a surprise and without warning.
Health insurance coverage generally provides financial coverage for a person both for proactive medical care (i.e. checkups,
exams, fitness recommendations) as well as reactive assistance when a person gets sick or injured (emergency room,
pharmaceuticals, surgery, etc.). By paying a predetermined fee on a monthly or quarterly basis, the applicant gets the ability to
avoid paying many of the costs directly for his health care. Instead the insurer pays those costs. By having enough applicants all
paying at the same time, the insurer tries to pool the revenue collected and insure generally those who are fairly healthy. While
some health costs will always be paid, overall the pool is kept large enough to for the insurer to always
stay profitable in the end. The more care and cost coverage a person wants usually requires a more
expensive monthly premium to be paid into the pool. By placing costs at different levels for different cost
coverage insurers then offset its risks further.
However, not everyone needs a fully comprehensive plan. The young and healthy need to see a doctor far
less than small children, middle-aged patients and seniors. Those who are on a budget or financial
constraint also can't always afford expensive plans, particularly if they have to pay out of pocket for their
coverage rather than obtaining it through an employer. As a result, to attract such customers and fill a
market niche, insurers have created what are called "catastrophic" insurance policies.
The catastrophic insurance policy doesn't address an applicant's general care or pharmacy needs. It also
doesn't provide for co-pays or simple, bad days when you have the flu or a stomach bug. Instead, these insurance plans are
intended for injuries obtained in horrible car crashes, freak accidents, serious and significant sport injuries, and completely random
health incidents that are not generally preventable with planning or forewarning.
Yet insurers can't write up a big enough policy that covers every possibility of how a human being can get hurt or catastrophically
sick. Instead, insurers create a stripped-down health coverage plan that doesn't kick in until the costs reach a point where the
average person won't have the funds to address the problem or the cure. Designed as a deductible, the covered party has to pay
out of pocket until a certain expense level is reached. This minimum financial threshold can be either per incident in a year or in
aggregate (i.e. you pay until a certain dollar level is reached for all medical costs in a year). Even then, insurers can still leave out
coverage altogether for certain conditions such as stroke or an unexpected heart attack or even cancer.
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