What Is a Catastrophic Health Plan?


Quick Answer

Catastrophic health plans are plans that are meant to be used only during a serious illness or catastrophe, due to the plans' high deductibles, according to Insurance.com. Also known as high-deductible health plans or HDHPs, these catastrophic plans are popular among consumers who are in good health and serve as backup protection in the unlikely event of a catastrophic illness or injury.

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Full Answer

The biggest advantage of a catastrophic health plan is its affordability, notes Insurance.com. These plans have high deductibles and premiums that are far less than most plans on the market. A common combination is to combine a catastrophic plan with a tax-friendly health savings account.

Under this type of plan, the plan holder pays for all of his medical expenses, with the exception of qualifying preventive care, until the deductible has been met, reports. Insurance.com. Once the deductible has been met, some catastrophic plans pay 100 percent for covered services, while others pay less, such as 80 percent. Premiums paid do not count towards the out-of-pocket maximums or deductible for the plan. However, even though the deductible is high, under the health care reform act, all plans must cover preventive care, so the cost of that care is not counted toward the deductible, such as cancer screenings.

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