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Affordable Care Act: Catastrophic Plan vs Full Coverage

Affordable Care Act: Catastrophic Plan vs Full Coverage - TaxACT

Are you eligible for a catastrophic plan? Is it right for you?

Under the Affordable Care Act, there are basically five levels of available health insurance plans: Platinum, Gold, Silver, Bronze . . . and Catastrophic.

Catastrophic is a minimal plan and has a number of limitations. It is therefore considered a separate plan from the other four plans.

What is the Catastrophic Plan?

A Catastrophic plan offers the same ten essential benefits as the other insurance plans available through the insurance marketplace.

However, a Catastrophic plan requires a high deductible to be paid by the patient before the insurance starts paying benefits.

On the other hand, the monthly premium you pay for it is typically low.

Catastrophic plans also cover, outside the deductible, three annual primary care visits and preventative care.

That means the plan pays for up to three general doctor visits per year, and covers preventive measures such as flu shots and screening for certain health conditions like high blood pressure and high cholesterol.

The key difference is the deductible, but that’s not something to disregard.

If you are healthy and young the Catastrophic plan might make sense. If you’re rarely sick and you want to gamble that you will not have any kind of accident, then you are balancing the risks and rewards.

It’s important to remember that under the Catastrophic plan, if, for instance, you break a leg skydiving, get in a car accident, or are diagnosed with a major illness, the insurance plan will not pay anything until you have paid $6,350 in healthcare costs ($12,700 for families), which is your deductible. That’s essentially the same for Bronze Plans as well.

Are You Eligible for the Catastrophic Plan?

You may not be eligible for a Catastrophic plan . These plans are only available to people who are under 30 years old and who cannot afford other health insurance coverage.

For families, all members must meet the requirements.

The plans are really designed for single, low-income individuals who do not have health insurance through their employer. If you are unable to find coverage for less than 8% of your income, you may be eligible.

What to Consider

It is possible, if your income is low, that you can receive premium tax credits and cost-sharing reductions for other plans covered by the ACA. These credits are not available with the Catastrophic plans.

If you do not qualify for a Catastrophic Plan but can’t afford the other available plans, you may be eligible for a hardship exemption. There are twelve hardship exemptions ranging from being homeless or a victim of domestic violence, to being ineligible for Medicaid because your state didn’t expand eligibility for Medicaid under the ACA.

If you qualify for the hardship exemption, you may be able to decline insurance coverage without paying the fine.

Another consideration is your age and your relationship with your parents. Under the ACA, you can stay on your parents’ health insurance plans until you are 26 years old.

The primary thing to consider, however, is how healthy you are and your tolerance for financial risk. People who are very healthy and confident they will not become sick or injured (which can, of course, be a total illusion) may feel a Catastrophic plan is the way to go.

The primary difference between a Catastrophic plan and Bronze plan is the coverage for chronic illnesses and any type of illness or situation that requires more than three doctor visits annually. Share this on Twitter

If you are healthy with no chronic conditions and are not on medications, the Catastrophic plans are less expensive as long as you do not get sick or injured.

There is not a huge difference between the Catastrophic and Bronze plans, except the cost of monthly premiums. Although some analysts predict the difference between Catastrophic and Bronze plans are probably only $5 or $10 per month, a quick window-shopping trip in one state (Michigan; Oakland County) shows the lowest estimated monthly premium for a Catastrophic plan was about $256 and the lowest estimated monthly premium for a Bronze plan was $337.

So the difference is $972 per year. Not an insignificant difference when the resulting plans are very similar.

Like almost every aspect of the health insurance marketplace, the key is to shop and compare while simultaneously thinking about what your probable healthcare needs are and how much financial risk you can tolerate.

About Mark Terry

Mark Terry is a freelance writer, editor and author specializing in healthcare and medicine. He lives in Michigan. Visit his website at www.markterrywriter.com.

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