What is catastrophic health coverage?


Quick Answer

Catastrophic health coverage comes with relatively low monthly premiums and protects an insured person from extremely steep medical costs, according to HealthCare.gov. In general, such a plan requires the insured to pay several thousand dollars upfront in medical costs before the insurance company pays.

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Full Answer

Under Affordable Care Act guidelines, people who have catastrophic health coverage are under 30 years old and qualify for hardship exemptions because paying for other plans would be too steep, according to Bankrate. The coverage pays for three primary care appointments as well as disease screening, vaccinations and some other preventative services. People can get hardship exemptions if other coverage choices cost more than 8 percent of their income or if their insurance plans were canceled for not meeting Affordable Care Act regulations. People who opt for catastrophic plans should do so only if they have a way to meet the big upfront costs.

A person who has a catastrophic plan through the health insurance marketplace does not qualify for premium tax credits or cost reductions based on income, explains HealthCare.gov. The person pays the regular cost of the catastrophic plan. A person who fills out a marketplace application receives an eligibility notice that explains what plans he qualifies for; catastrophic plans are included, if applicable.

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