What is a catastrophic policy?
A catastrophic policy is an insurance policy that covers only serious medical emergencies and illness. In most cases, the patient is responsible for all other medical-related costs.
Limited preventative care is often covered under catastrophic policies. This includes a select number of visits to your family physician or relevant specialist. Blood pressure screenings, HIV tests and other tests may be covered.
Deductibles under a catastrophic plan are harder to meet than they are with traditional health insurance plans. A majority of catastrophic plans feature deductibles that kick in only after thousands of dollars have been spent. After paying the deductible, services related to the plan go into effect. Until the deductible is met, the insured party must pay for any expenses, except those listed among approved preventative care.
Catastrophic insurance usually is available only to people under age 30. Anyone who can prove a hardship exemption may also be eligible on a monthly basis. The exemption is usually reviewed each month and cannot exceed a full year of coverage.
Catastrophic policy example
A 25-year-old in good health gets an annual checkup from a doctor. During the course of the year, he falls during a soccer game and must be transported to the hospital. The doctor discovers just a sprain, but the cost of the diagnosis and treatment is less than the deductible for the patient’s catastrophic policy. Therefore, the patient is responsible for all costs related to his injury.
If he is admitted to the hospital later in the year after a serious car accident, the policy will kick in because the cost of treatment will exceed the high deductible.