The health insurance landscape seems to change faster than the weather in Texas. As a result, there tends to be a good bit of confusion around what policies are available and how they work. One of the most misunderstood of the currently available health insurance policies in Texas today is the Catastrophic Health Insurance plan. In today's Health Insurance Tip, we will explore what the Catastrophic Health Insurance Plan does and does not cover.
What Is A Catastrophic Health Insurance Plan?
At its core definition level, the word catastrophic implies that this health insurance plan is only there to protect you against major, or catastrophic, events. It is not going to be involved in the day to day interactions that you have with your Primary Care Physician. A visit for a cold is not a catastrophic event. Nor is an annual wellness check. Texans have been convinced over the last two decades that these activities should be covered by their health insurance, which is just not true. You do not need to involve an intermediary in your routine visits to a Primary Care Physician to maintain great healthcare. However, the Catastrophic Health Insurance plan is there to make sure that if you go to the hospital, have a surgery, or are diagnosed with a major disease like cancer that you have predictable and dependable care that does not sink you financially.
How Does a Catastrophic Health Insurance Plan Work?
How a Catastrophic Health Insurance Plan is implemented and works is dependent upon your preferences in some respects. One of the large misconceptions is that a Catastrophic Health Insurance plan must have a large deductible. It would make sense intellectually that these plans must have a large deductible to be paid prior to covering your healthcare expenses, there is a much better way to implement this coverage. Let's take a closer look.
Generally speaking when we look at Catastrophic Health Insurance, we are attempting to cover either a hospitalization and/or treatment for a long term condition or diagnosis. Think cancer or stroke rehabilitation. Remember, we are not covering your annual check up with your Primary Care Physician or a visit for the flu. So how can we cover these items efficiently without a large out of pocket cost to you and your family? We do that with a three pronged approach.
Three Pieces Of A Catastrophic Health Insurance Policy
- A Critical Illness policy will take care of the major illnesses, diagnosis, or condition that often results in a hospitalization. This policy will take care the expenses associated with cancer, circulatory issues (stroke, heart attack, or blood clots), Gastro-intestinal issues, or other major events. This means that those big scary hospital bills are covered at any level of deductible that you choose.
- An Accident policy will take care of the bills that come with an accident such as a sports injury, falling off a ladder, or even a car wreck. We all know that an ambulance ride, an ER visit, and a potential corresponding surgery can cost an arm and a leg. No pun intended. So this policy covers those expenses for you.
- A Hospital Indemnity policy allows for you to have a defined amount of cash to cover things small outpatient procedures, hospital stays, or other required treatments. The dollars that you receive from this portion can be used to offset co-insurance or even deductibles. The amount of money that you receive is defined by the services rendered and your contract. No what a bill stipulates.
The three plans work in tandem to provide a safety net to cover those major items that can cost you a lot of money out of pocket with today's current health insurance plans. The plans that are present on the ACA Exchange are typically put together with large deductibles and co-insurance costs up to an extremely high maximum out of pocket amount. With the Critical Illness and Accident policies listed above, the deductibles can be kept much lower and the Hospital indemnity plan allows for you to offset co-insurance costs which limits your out of pocket costs.
Along with lowering the out of pocket costs, these plans also can be very cost effective on a monthly premium basis. This is a direct result of the insurance company not having to process claims for that annual wellness visit or the $15 blood draw that goes with that visit. Even though you will pay for a doctor visit out of pocket, the total annual cost for your family is typically greatly reduced from the total cost of an individual health insurance plan available from the larger market sources.
If you would like to learn more about these policies and how they work, schedule a time to talk an agent at Insurance For Texans. We work with multiple carriers who can give you options to craft a plan that can meet your needs while focusing on keeping your costs under control. Schedule a consultation today!