Catastrophic Insurance: Over-30S Covered?

Catastrophic health insurance is available to people over 30, but only if they qualify for an exemption. This could be a personal hardship exemption or an affordability exemption. Examples of circumstances that may qualify someone for a hardship exemption include homelessness, eviction, bankruptcy, the death of a family member, or being a victim of domestic violence. An affordability exemption may apply if the cheapest available health coverage option costs more than 8.09% of a person's household income. Catastrophic health insurance plans are designed to protect against worst-case scenarios, such as serious accidents or sudden illnesses, and typically have low monthly premiums but high deductibles.

Who is eligible for catastrophic insurance over 30?

Catastrophic health insurance is a type of health plan that offers coverage in times of emergencies as well as coverage for preventive care. It is typically available to individuals under the age of 30 who are looking for minimal coverage and low monthly premiums. However, people over 30 may also be eligible for catastrophic insurance if they meet certain criteria.

To be eligible for catastrophic insurance over the age of 30, individuals must qualify for a hardship or affordability exemption. This means that due to unaffordability of coverage, economic hardship, or certain other hardships, the person is not required to maintain health insurance coverage. Examples of hardships that may qualify for an exemption include:

• Homelessness
• Eviction or foreclosure
• Shut-off notice from a utility company
• Victim of domestic violence
• Death of a family member
• Inability to pay medical expenses resulting in substantial debt
• Unexpected increase in necessary expenses when caring for an ill, disabled, or ageing family member
• Bankruptcy

Affordability exemptions are based on marketplace or job-based insurance being unaffordable. Specifically, if the cheapest health coverage option available to an individual (through the marketplace or their employer) costs more than 8.09% of their household income, they may qualify for an affordability exemption.

It is important to note that the eligibility criteria for catastrophic insurance may vary by state and insurance provider, so it is recommended to check with specific insurance providers and healthcare authorities to ensure that all requirements are met.

What are the pros and cons of catastrophic insurance?

Catastrophic health insurance is a low-cost, high-deductible insurance plan designed for people who don't need regular medical care. It is available to people under 30 and those over 30 who qualify for a hardship exemption. Here are some of the pros and cons of catastrophic health insurance:

Pros

• Affordability: Catastrophic health insurance has low premiums, making it a good option for those who cannot afford more comprehensive coverage.
• Essential health benefits: Despite being a basic insurance plan, catastrophic health insurance covers essential health benefits, including preventative care and three primary-care visits per year.
• Protection in emergencies: Catastrophic health insurance provides coverage in the event of a significant medical emergency, protecting individuals from high medical costs.

Cons

• High deductibles: Catastrophic health insurance plans have very high deductibles, which means that most routine medical expenses will need to be paid out of pocket.
• Limited eligibility: Only people under 30 or those with a qualifying hardship exemption can purchase this type of plan.
• No tax breaks or subsidies: Catastrophic health insurance plans do not qualify for tax breaks or subsidies, which are available for some other types of health insurance plans.
• Not suitable for frequent medical care: Catastrophic health insurance is not suitable for individuals with ongoing health conditions that require regular care or frequent doctor visits.

How does someone apply for an exemption?

To apply for a catastrophic insurance exemption, you must be 30 or older and meet the criteria for a "hardship exemption" or an "affordability exemption". A hardship exemption applies if you have experienced a situation that has prevented you from being able to afford health coverage. Some common examples of situations that qualify for a hardship exemption include:

• Being homeless in the last three years
• Being found ineligible for Medicaid due to your state not expanding its Medicaid program
• Eviction
• Domestic violence
• Bankruptcy

An affordability exemption applies if the cost of coverage is unaffordable due to your income. To qualify for an affordability exemption, the lowest-cost plan in the exchange would need to be more than 7.97% of your modified adjusted gross income (MAGI).

To apply for an exemption, you must fill out an application form and submit it to the Exchange. You can find the relevant forms on Healthcare.gov. The Exchange will then notify you by mail if your application for an exemption has been successful or not.

It is important to note that obtaining a hardship exemption can be a lengthy process and may take several weeks. Therefore, it is advisable to start the process early if you wish to obtain an exemption during the annual open enrollment period.

What are the costs of a catastrophic health plan?

Catastrophic health insurance plans are designed to protect you financially in the case of a worst-case scenario, such as a serious accident or illness. They are a type of high-deductible health plan, which means they have low monthly premiums but very high deductibles. This makes them a good option for people who are young, healthy, and don't anticipate needing frequent medical care but want protection against unexpected, costly events.

The monthly premiums for catastrophic health insurance are typically low. The average monthly cost for someone aged 30 is $282, while for a 21-year-old, it is $248, and for a 27-year-old, it is $260. These premiums are much lower than those of standard health insurance plans. However, it is important to remember that the trade-off for these low premiums is a high deductible, which is the amount you must pay out of pocket before your insurance company starts contributing.

The deductible amount for catastrophic health insurance plans is usually very high and can be a couple of thousand dollars or more. For example, in 2023, the deductible for catastrophic plans could not exceed $8,700, and in 2019, it was $7,900. This high deductible is designed to protect policyholders from financial ruin in the event of a major medical expense. Once you meet the deductible, the insurance company will start covering a significant portion of your healthcare expenses for the rest of the year.

Catastrophic health insurance plans also have limitations on out-of-pocket costs, which are designed to provide financial protection in case of major medical expenses. The annual out-of-pocket maximum for these plans is set by the government and can change from year to year. For 2023, the maximum limit for an individual was $8,700.

While catastrophic health insurance plans have low premiums, they may not be suitable for everyone. They are generally designed for young, healthy individuals who want protection against worst-case scenarios but are willing to manage routine healthcare expenses on their own. If you require regular medical care or have chronic health conditions, this type of plan may not be cost-effective. Additionally, these plans do not qualify for premium subsidies through the Health Insurance Marketplace, so you will pay the full premium cost.

What is the difference between catastrophic insurance and regular insurance?

Catastrophic health insurance is a type of medical coverage available to people under 30 and adults over 30 who have a government-approved general hardship exemption. It is a low-cost, high-deductible insurance plan with low monthly premiums but high deductibles and out-of-pocket maximums. Catastrophic plans are designed to protect individuals in worst-case scenarios, such as serious accidents, sudden severe illnesses, or unexpected hospitalizations. They are not meant to cover routine or day-to-day healthcare needs.

Regular insurance plans, on the other hand, typically have higher monthly premiums but lower deductibles. They are designed to cover a wider range of medical expenses, including routine care, and may offer more comprehensive coverage depending on the specific plan. Regular insurance plans may also provide coverage for a broader range of individuals, without the age restrictions or exemption requirements of catastrophic plans.

The main difference between catastrophic insurance and regular insurance lies in their cost structure and the extent of coverage. Catastrophic insurance plans are designed to be low-cost options with affordable monthly premiums, making them accessible to individuals who may not be able to afford other types of insurance. However, this comes with the trade-off of high deductibles and out-of-pocket costs. These plans are intended for unexpected, significant healthcare expenses and may not cover routine medical care.

In contrast, regular insurance plans usually come with higher monthly premiums but provide more comprehensive coverage. They are designed to cover a wider range of medical expenses, including routine care and preventative services. The higher premiums may result in lower out-of-pocket costs when compared to catastrophic plans, as individuals may not need to meet a high deductible before their insurance company starts contributing.

In summary, catastrophic insurance is characterized by low premiums, high deductibles, and limited coverage for catastrophic events, while regular insurance plans offer more comprehensive coverage with higher premiums and lower deductibles. Catastrophic plans are suitable for individuals seeking affordable coverage for unexpected major medical expenses, while regular insurance plans are designed for a broader range of medical needs and may provide more financial protection for routine healthcare services.

Frequently asked questions