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CATASTROPHIC COVERAGE AND HEALTH INSURANCE; WHAT IS THE DIFFERENCE?

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Anna Paquin
CATASTROPHIC COVERAGE AND HEALTH INSURANCE; WHAT IS THE DIFFERENCE?

Catastrophic coverage refers to a type of health insurance plan that provides protection against high medical costs resulting from severe illness or injury. These plans typically have lower monthly premiums but higher deductibles compared to traditional health insurance plans.

 

Catastrophic coverage offered by health insurance companies in Sri Lanka is designed for individuals who are generally healthy and do not anticipate needing frequent medical care, but want financial protection in case of a major medical event, such as a serious accident or illness. Once the deductible is met, catastrophic coverage usually kicks in to cover a large portion of remaining medical expenses, offering peace of mind against significant financial burdens associated with unexpected healthcare needs. These plans often have limitations on the types of services covered until the deductible is met, such as preventive care or routine doctor visits, and are usually available primarily to younger individuals under a certain age threshold.

 

What are the differences between catastrophic coverage and health insurance?

Catastrophic coverage is a type of health insurance, but it differs from traditional health insurance plans in several key ways:

·        Premiums: Catastrophic coverage typically has lower monthly premiums compared to traditional health insurance plans. This makes it more affordable for individuals who are generally healthy and do not expect to use medical services frequently.

·        Deductibles: Catastrophic coverage usually has higher deductibles than traditional health insurance plans. Deductibles are the amount you must pay out of pocket for medical expenses before your insurance coverage kicks in. In catastrophic coverage, the deductible is typically high and applies to most medical services, except for preventive care, which may be covered without meeting the deductible.

·        Coverage: Catastrophic coverage is designed to protect against major medical expenses resulting from severe illnesses or injuries. Once the deductible is met, catastrophic coverage typically covers a large portion of remaining medical expenses. However, until the deductible is reached, coverage for non-emergency medical services may be limited or non-existent.

·        Eligibility: Catastrophic coverage is generally available only to individuals under a certain age threshold, typically under 30 years old, or those who qualify for a hardship exemption. This is because catastrophic plans are intended for younger, healthier individuals who want financial protection against unexpected medical costs but are less likely to require frequent medical care.

·        Preventive Care: Catastrophic coverage may cover preventive care services, such as vaccinations and annual check-ups, without requiring you to meet the deductible. This is to encourage preventive healthcare practices, which can help detect and address potential health issues before they become more serious and costly.

 

Catastrophic coverage offers a lower-cost option for individuals who want protection against major medical expenses but are willing to accept higher out-of-pocket costs for routine healthcare services. It is important to carefully consider your healthcare needs and financial situation when choosing between catastrophic coverage and traditional health insurance plans. Sometimes these types of covers are also offered by life insurance companies in Sri Lanka, together with life insurance policies.

 

Can you get health insurance with catastrophic coverage?

Yes, you can obtain health insurance that includes catastrophic coverage as part of its benefits. In fact, catastrophic coverage is often included as an option within certain types of health insurance plans, particularly high-deductible health plans (HDHPs).

 

High-deductible health plans typically have lower monthly premiums than traditional health insurance plans but require you to pay a higher deductible before your insurance coverage begins. Within these plans, catastrophic coverage provides protection against major medical expenses once you reach the deductible.

 

It is important to note that catastrophic coverage is not typically available as a standalone insurance option; it is usually offered as a component of a broader health insurance plan. So, when you choose a health insurance plan, you can look for options that include catastrophic coverage if you want the added protection against significant medical expenses while still benefiting from lower monthly premiums.

 

What does catastrophic coverage usually include?

Catastrophic coverage usually includes protection against major medical expenses resulting from severe illnesses or injuries. While the specifics can vary depending on the insurance provider and plan, here are some common features of catastrophic coverage:

·        High Deductibles: Catastrophic coverage typically has high deductibles, meaning you must pay a significant amount out of pocket for medical expenses before your insurance coverage begins. This deductible is usually much higher than what you'd find in traditional health insurance plans.

·        Coverage for Major Medical Events: Once you reach the deductible, catastrophic coverage kicks in to cover a large portion of remaining medical expenses. This coverage is designed to protect you against significant financial burdens associated with severe illnesses or injuries, such as hospitalisations, surgeries, or treatments for serious medical conditions.

·        Limited Coverage Before Deductible: Until you meet the deductible, catastrophic coverage may have limited coverage for non-emergency medical services. This means you may have to pay the full cost of routine doctor visits, prescription medications, and other healthcare services until you reach the deductible. However, preventive care services may be an exception, with some plans covering them without requiring you to meet the deductible.

·        Financial Protection: Catastrophic coverage offers financial protection against unexpected and costly medical events. While you may have to pay higher out-of-pocket costs upfront, catastrophic coverage can provide peace of mind knowing that you won't face overwhelming medical bills in the event of a major health crisis.

·        Lower Premiums: One of the benefits of catastrophic coverage is that it typically comes with lower monthly premiums compared to traditional health insurance plans. This makes it an attractive option for individuals who are generally healthy and do not expect to use medical services frequently but want protection against high medical costs.

 

Catastrophic coverage is designed to provide a safety net for individuals who want financial protection against major medical expenses while accepting higher out-of-pocket costs for routine healthcare services. It is important to carefully review the details of any catastrophic coverage plan to understand its specific benefits, limitations, and cost-sharing requirements.


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