Many people search for “catastrophic health insurance” because they don’t want to be completely uninsured but can’t afford the typical health insurance premium. This low premium, high-deductible coverage can be a boon for individuals who need a worst-case-scenario plan.
Unfortunately, this option may be off the table if you are over 30 or don’t qualify for a hardship or affordability exemption. Even if you are eligible for a catastrophic health plan, the high deductible may be out of reach should you actually need to use your coverage.
What should you do?
Check into a catastrophic health insurance plan, but don’t stop there. Spend a little time familiarizing yourself with other possibilities. Depending on factors such as eligibility and budget, your choices may also include short-term health insurance, a subsidized ACA plan or Medicaid.
You may find that catastrophic health insurance makes the most sense, or you could realize there’s another cost-effective option that better meets your healthcare needs. We’ll sort through the four options mentioned above and cover the basics to help you make an informed decision.
1. Look at Short-Term Health Insurance.
While not catastrophic insurance, short-term health insurance is an economical plan that provides protection should an accident or unexpected illness strike.
What makes short-term plans economical? They’re designed to help with the types of high-dollar healthcare costs you can’t see coming. The Affordable Care Act doesn’t apply to short-term plans, so they don’t include all of the essential health benefits an ACA plan offers and won’t typically cover preventive care or pre-existing conditions.
Another reason short-term health insurance is worth considering is that it tends to be flexible. You can buy a policy for as few as 30 days and up to 364, depending on how long you need coverage and the limits set by your state. A range of deductibles and optional add-on benefits make it possible to customize your coverage. Most plans include an open network, which allows you to use any healthcare provider who accepts your insurance.
You can apply for a short-term health plan year-round and get covered as soon as the next day if your application is approved.
That said, short-term coverage won’t work for everyone. It isn’t sold in every state and applicants can be denied based on a pre-existing condition. If you have ongoing health concerns, qualify for an ACA subsidy, or want certain benefits not typical of short-term plans (e.g., maternity), then you should consider another option.
2. See if You Qualify for a Tax Subsidy on an ACA Plan.
Paying full price for individual major medical insurance might be out of the question, but don’t rule out an ACA plan until you know if you are subsidy-eligible.
If you qualify for tax credits that reduce your premium, an ACA plan could provide you with the most benefits for the lowest cost. You would gain access to all of the essential health benefits, including preventive care and maternity. ACA plans are also guaranteed; you can’t be denied or charged more based on your health history.
Depending on your income, you could also qualify for a cost-sharing reduction. This type of subsidy applies to silver plans and lessens out-of-pocket costs (i.e., deductible, copayment, coinsurance) for covered medical expenses.
You can use an online subsidy calculator to see if you might qualify for cost-sharing reductions or premium tax credits and, if so, estimate your potential subsidy. Your eligibility and actual subsidy amount will be determined once you apply.
Every state has ACA plans, but enrollment is limited to the annual open enrollment period unless you have a qualifying life event (e.g., having a baby, moving) for special enrollment. If you are not eligible for a subsidy or special enrollment, then you may want to investigate another form of benefits.
3. Check Into Catastrophic Health Insurance.
If you are under 30 or can prove financial hardship, look into a catastrophic ACA plan. Catastrophic health insurance is designed for individuals on a limited budget. As mentioned earlier, they have relatively low monthly premiums and high deductibles.
Your premium will vary depending on factors such as where you live; however, all catastrophic plans have the same deductible. These plans do not have a copayment or coinsurance. For the 2020 coverage year, the annual catastrophic health insurance plan deductible is $8,150.
ACA subsidies do not apply to catastrophic plans. If you qualify for cost-sharing reductions or premium tax credits, then it is possible a bronze or silver plan could have both a lower premium and a smaller deductible. Gather quotes for both options, and others mentioned in this article, to compare costs.
Catastrophic policies must include all of the ACA’s essential health benefits, cover certain preventive services at no additional cost, and cover at least three primary care visits per year before you’ve met your deductible.
Catastrophic plans, like ACA plans, are available in every state during open and special enrollment periods. If you are over 30 and don’t qualify for a hardship or affordability exemption, then you can’t enroll in a catastrophic plan.
4. Find Out if You Qualify for Medicaid.
If you meet income guidelines and other criteria for your state’s Medicaid program, you could qualify for low-cost or no-cost coverage.
Under the Affordable Care Act, some states expanded Medicaid to anyone with a household income below 138% of the federal poverty level. You can use an online calculator to see if you qualify or contact your state’s Medicaid program to see if you meet its criteria. To get a final decision regarding your eligibility, you’ll need to apply.
Medicaid is available year-round through your state’s health insurance exchange or Medicaid agency — keep in mind that some states call their program something other than Medicaid. There is no open enrollment period. What Medicaid covers and how much it costs varies by state. Work requirements and other requirements may also apply, depending on where you live.
Ways to Save on Healthcare if You’re Uninsured
Ideally, you don’t want to go without some form of health insurance because you’ll be on the hook for all of your medical bills if you become sick or injured. If you must remain uninsured, there are a few things you can do to access healthcare and keep costs as low as possible.
Telemedicine allows you to receive healthcare via phone or video chat. It’s not only convenient (e.g., care is available 24/7, you don’t have to leave home or the office, there’s no network), it can also cost half as much as a trip to urgent care or even less. Sure, there are some things a virtual visit can’t treat, but telemedicine can be used for a range of physical and mental health concerns such as flu, allergies, pink eye, anxiety and more.
Community health centers
HRSA programs make healthcare available to certain populations who might not otherwise have access to it. Programs include primary and preventive care, HIV care and services, rural health, and maternal and child health, to name a few. You can use the national Health Resources & Services Administration (HRSA) database to locate a health center near you.
Public health clinics
If you are uninsured or underinsured, you may be able to get preventive care or immunizations for an income-based sliding scale from a public health clinic — services might even be free. Search online or contact your county or state health department to learn about public health clinics and services where you live.
Hospital financial assistance programs
Hospital financial assistance programs
Nonprofit hospitals must offer financial assistance plans, which make medical services free or discounted for those who meet certain guidelines. Sometimes this is called charity care. If you’ve received healthcare from a nonprofit hospital, contact the billing department to learn more and find out if you’re eligible for help.
If you receive care from a for-profit hospital, you can also contact the billing department to see if assistance or a payment plan is available. It never hurts to ask.
Know what you’ll pay ahead of time
If it isn’t an emergency, you can get quotes for costs ahead of a procedure. Get them signed and in writing — and for all providers who will provide care and all related services (e.g., anesthesiology, surgery, lab work).
You can also contact the provider’s billing department to see if you qualify for a discount if you pay all of or a percentage of your bill up front. They may also be able to offer a payment plan.
Websites such as Fair Health Consumer can help you get an idea of what certain medical procedures cost in your area. This can give you a reference point.
What coverage should I choose?
Everyone’s situation differs. The best and most affordable coverage for you will depend on your eligibility, healthcare needs, and budget.
Regardless of what type of coverage you ultimately pick, we encourage you to learn about what’s available to you and how much it costs. You may be surprised. The reality is, millions of Americans remain uninsured because they haven’t researched their coverage options and don’t think they can afford health insurance.