Catastrophic plans: Are they a good fit for you?
At this time of year, you might be considering renewing your health insurance through the federal healthcare marketplace if you don’t have employer-sponsored coverage. Nearly 46% of non-elderly American workers do not have access to health insurance through their jobs. The purpose of the Affordable Care Act (ACA) is to provide access to affordable health insurance for those who don’t have it. But despite the ACA’s best intentions, health insurance rates continue to rise.
If you find yourself pinching pennies and think you may not be able to afford your health premiums in 2017, take a look at these 10 quick facts about catastrophic plans to see if one may be right for you.
- Catastrophic health care plans are low premium, high deductible ($6,850 per person) insurance plans that can protect you against a worst-case scenario like an accident or serious illness but do NOT cover most routine medical procedures.
- Catastrophic plans are best for young, healthy individuals who don’t need to go to the doctor often.
- To qualify for a catastrophic plan you must be under the age of 30 or, if over 30, you must qualify for a hardship exemption.
- A hardship exemption means you cannot afford to pay for the premiums of a regular metal-level (Bronze, Silver, Gold, Platinum) plan. In general, if your premiums are more than 8% of your annual income, you may qualify for a hardship. Hardship can also be claimed if you are homeless, evicted, suffer domestic violence, go bankrupt, or several other options.
- Note, though, that you cannot simply claim a hardship exemption on your tax return; you must send in an application and proof of hardship. We can help you with this.
- Catastrophic plans, under the ACA, meet the minimum essential coverage (MEC). MEC is the type of health care plan required by law to keep you from paying a fee for not being covered.
- Catastrophic plans purchased through the healthcare.gov marketplace do cover three primary care visits per year plus some vaccinations and disease screenings at no cost to you and before your have to pay any of your deductible.
- Except for the primary care visits mentioned above, before your insurance coverage kicks in you must pay all of the $6,850 per year out-of-pocket deductible for any medical care you receive.
- Premium subsidies – those tax credits you can get either before or when you file your tax returns – are NOT available for catastrophic plans. In other words, you don’t get any help from the government to pay those already low premiums.
- Some catastrophic plans may not cover emergency services or prescription drugs. Check the fine print.
- If you choose a catastrophic plan, be sure you have or know where you will get the funds to pay the $6,850 out-of-pocket expenses, if necessary.
The bottom line is: A catastrophic plan may be a money-saver for you if you are under 30, healthy and careful or if you qualify due to a hardship. However, many of the Bronze or Silver level plans on the marketplace will provide much more coverage (including cost-sharing of some medical procedures) and allow you to get a subsidy to help you pay for the premium. So it could be a wash for you, depending on circumstance.
Before you buy, check the healthcare.gov marketplace to see if you qualify for either the catastrophic plan or a metal-level plan with a subsidy. The deadline for open enrollment is December 15th if you want coverage on January 1st, or January 15th to get covered by February 1st.
Stay healthy out there!