Do not get yourself confused between a high deductible and a catastrophic health care coverage because these are two names of the same type of plan. The basic concept for this type of insurance is that you get to pay lower premiums to have yourself insured for some unforeseen serious illness or accident but since the premiums are low, there are some limitations. This can be very efficient especially when the prices of the standard long term insurance are more expensive and it is getting higher each year. However, any health insurance may become a burden or waste of money if it will not work for you and sustain your needs. For you to be able to determine if a catastrophic health care coverage will really work for you, you have to know how it works. Here’s some stuff that may help you out.
We will begin with some definitions you have to understand.
- A premium is your monthly payment for your insurance.
- A deductible is how much you will pay for your own medical care before the insurance company pays anything at all.
- Copays come in two kinds. The first is like a “get in the door” fee – it’s usually $12 or $25 or some nominal amount that mostly makes you think twice about making that appointment or buying that drug. It means you realize that your healthcare isn’t free – that first copay just kick-starts the rest of the payment process.
- The second kind is percentage copay, like 80/20, also called “coinsurance,” meaning that once you are past your deductible limit, you will pay 20% of the rest of the bills and your insurer will pay 80%.
You have to understand that health insurance companies are not a charitable institution to help you out without expecting anything in return. They are BUSINESS. They are here to make a profit. The basic concept for them is to take, take and take and give less for them to earn profit. They will do their best to take as much as money from you and give you as little as possible. But you can do otherwise if you are wise enough to know how a particular health insurance you’re enrolled in works.
Your problem is that when you do not have the money to pay for the premiums, you cannot be insured at all. With that comes the catastrophic health care coverage which offers low monthly premiums. However, despite the small amount for the premiums, you are required to give more out-of-pocket money to get medical services you may need. They won’t have to pay anyone on your behalf until a certain, very high threshold is met. So insurance companies set up a variety of plans that require you to assess your “risk” – the chances you will get sick or injured, the chances you will need to tap into your insurance, the chances they will need to pay too much for your medical problems.
A regular plan, with a higher premium but lower deductible, means you will pay the insurance company more and they will pay more on your behalf. You have decided that your risk of getting sick or hurt is high enough that it’s worth it to pay more each month.
A high deductible, catastrophic health care coverage with a very high deductible and lower premium means you will pay a lot more money initially, before the insurance company begins to pay out on your behalf at all. You have decided that your risk of getting sick or hurt is lower and you can save some money by not paying so much money for insurance.
Here are some concrete examples that might help you out. A regular long term insurance plan might ask you to pay $1,000 a month to the insurance company, and your deductible is $500. Once you’ve already paid out that deductible, when you go the doctor and she writes a prescription, they will tell you, “Okay patient – you pay a copay of $25 for your doctor visit and $15 for your prescription and we’ll pay the rest.” At the end of the month, if you don’t see the doctor any more than that, then it has cost you $1,040 for your healthcare that month.
A high deductible/catastrophic health care coverage might ask you to pay $500 a month to the insurance company, but your deductible is $2,500. Same scenario – you go to the doctor and she writes a prescription. Only this time, you have paid for the office visit ($100) and for the drug ($15) – but because your deductible is so high, you haven’t spent it yet that year, so the insurance company won’t pay anything yet on your behalf. Your total cost that month is ($500 premium + $100 + $15 = ) $615.
Now, if you only have to go to the doctor one time in that month, then it turns out your high deductible plan was a better deal for you because if you had paid for the more expensive health plan, then you would have spent $435 more than you paid with your catastrophic/health care coverage.
However, suppose your son falls off his skateboard. He suffers a concussion that knocks him out. Worse, he breaks his arm in three places, which requires surgery to set his arm and pin it so it will heal well. The expense! Those initial copays will be the least of your worries. You’ll pay that entire $2,500 plus the 20% additional – potentially many thousands of dollars. With a regular health insurance plan, your out-of-pocket amount would be far less.
Now, do you see how the catastrophic Health care coverage works? If you and your family are sufficiently healthy and would not require so often medical services, the catastrophic health care coverage may work for you. It will save you from high-cost monthly premiums and since you seldom visit doctors or avail any prescription or medical services, you can save money while at the same time ensuring your whole family to any illness or accident that are unforeseen to happen.
On the other hand, if you and your family members have any medical challenges, like high susceptibility to catching whatever bug comes down the pike or a chronic condition of any type, then a catastrophic health care coverage will probably cost you more from your pocket in the long run.
For you to know the health risks of you and your family, you can go and search the internet on Choosing the Right Insurance Plan. There are questions you can answer and are evaluated to determine what particular health care insurance will work for you.