Starting with effective dates of Jan. 1, 2014, all major medical insurance plans sold on and off state-based and federally facilitated health insurance exchanges fall into one of four metal level categories—bronze, silver, gold and platinum. These plans must meet certain Affordable Care Act requirements, including certain preventive health services, 10 essential health benefits categories, and no pre-existing condition limitations, among others. Most Americans must obtain this type of major medical insurance either on their own or through an employer.
However, some individuals, including those under 30 and those with hardship exemptions, may be eligible for a fifth option: a catastrophic health insurance plan.
A catastrophic plan is pretty much what it sounds like—an insurance plan designed for worst-case scenarios. Catastrophic health plans are designed to offer some financial protection in the event of steep medical bills arising from accidents and unexpected illnesses. They usually come with lower monthly premiums and higher deductibles than comprehensive major medical insurance plans.
With a catastrophic health plan, your deductible must be met before it covers any benefits; the only exception, per the Affordable Care Act, is three primary care visits per year and certain preventive care services, which may be used before you hit your deductible amount. Catastrophic plans also include essential health benefits; however, these benefits will not kick in until you meet your deductible.
This type of coverage tends to be a better fit for young, healthy people who do not have ongoing medical conditions and infrequently visit their doctor. However, their cost often appeals to those who find major medical plans unaffordable.
Obamacare allows people under age 30 and certain individuals who receive a hardship exemption to enroll in catastrophic health plans. Under these circumstances, catastrophic plans fulfill the requirement that most people have health insurance or face a tax penalty.
Healthcare.gov lists these 13 types of hardship exemptions for 2014:
Those who qualify for catastrophic health insurance will see such plans listed as an option when they fill out exchange-based health insurance applications, according to healthcare.gov.
Visit your state’s health insurance exchange website to locate an agent or broker and other certified helpers in your area who can answer your questions and assist you in finding the right coverage for your situation.
You must apply for a hardship exemption and include the application when filling out your catastrophic health insurance application. Click here to download the form. Page 2 of the application lists what other documentation must be supplied. For instance, if you qualify for a hardship exemption because your health plan was canceled as a result of the Affordable Care Act, you must submit this form as well as proof of cancelation when applying for a catastrophic plan.
No. If you enroll in a catastrophic health plan, you will not qualify for a premium tax credit or other Obamacare cost-sharing subsidies.
On a related note, even though catastrophic plans are not considered qualified health plans that fulfill the minimum essential coverage requirement, your hardship exemption allows you to enroll in a catastrophic plan without facing a tax penalty called the individual shared responsibility payment.
Temporary health plans are another insurance option for those with hardship exemptions or those who need coverage until their major medical plan becomes effective. They are available for 30 to 364 days, depending on where you live.
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Do you have questions about temporary coverage or buying major medical insurance on or away from your state’s exchange? Talk to one of healthedeals.com’s certified health insurance advisors at 888-839-7679.