How to Use Catastrophic Health Insurance to Your Advantage

Catastrophic health insurance has proven to be an effective solution to rising health insurance costs. If you or your family or relatively healthy, and don't have significant medical costs each year, you can use catastrophic health insurance to your advantage.

Difficulty: Easy

Instructions

Things You'll Need:

• Some time
• Plan Information
• A local insurance agent (optional)

1. 

   Shop Around: Even though most catastrophic health insurance plans are affordable, the rates can vary significantly based on your age, family size, and the company's rating system. It's a good idea to do your research before choosing which company to go with.
   
   In addition, check the Better Business Bureau to make sure the company you are considering doesn't have an excess number of complaints, or any unresolved complaints. Also, check AM Best or another financial rating service to make sure the insurance company is stable.

2. 
   Better Business Bureau Website

   Apply for a Plan: Once you decide what company to go with, send in an application and get the process started. Many catastrophic plans offer 100% coverage after the deductible, which make it easy to know your out-of-pocket-maximum for the year. Also, some plans offer the ability to add supplemental accident benefits or cancer riders to your plan. Most catastrophic plans pay for one preventive care visit per person, per year. Make sure you know what benefits the company offers before you apply.

3. 
   Health Savings Account

   Open a Health Savings Account (HSA): The most popular type of catastrophic health insurance plan is a "Qualified High Deductible Health Plan." These plans allow you to open an HSA at your local bank or credit union. Once the account is open, you can deposit money pre-tax into your account. The funds can then be used to pay for medical, dental, vision, and other expenses tax free. It's a huge bonus, especially if you're in a medium or high tax bracket.

Tips & Warnings

• Be sure you know the deductible, out of pocket maximum, and lifetime maximum benefits for the plan you apply for, before you apply.
• Research what expenses are eligible to be paid for out of your HSA. The IRS has a list of expenses that are eligible at IRS.gov.
• You won't be eligible to open an HSA unless you own a qualified high deductible health plan.
• Be cautious of plans with low limits, or limits on how many procedures they will cover for each medical event.

Resources

• Catastrophic Health Insurance Information
• IRS Info on Health Savings Accounts

[xivyisazombiex]

on 10/26/2009 Health insurance is mandatory in Massachusetts So i am glad i read this article because it opens me to different options. thank you.

[kandipassion]

on 10/24/2009 Insurance is so expensive now that we have to shop around. Thanks this article is helpful and very useful 5*.

[flor2729]

on 10/23/2009 Thanks for sharing this information. Will definitely look into this.