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Catastrophic Insurance May Be The Way To Affordable Care


While many Americans struggle to find gainful employment, health insurance is often of lesser priority on the minds of most. Health insurance, however, remains an important consideration even for the healthy. Accidents do happen. One of the more affordable and comprehensive coverage plans is called catastrophic insurance.

While the name sounds a bit dubious, catastrophic insurance is a good option to consider for the unemployed, underemployed or self-employed individual. The plan, also known as High Deductible Health Plans (HDHPs), allow for lower monthly premiums and overall lower medical costs. This does, however, come with a price.

Under a high deductible plan, the annual deductibles are, like the name says, high. Most of the medical care sought must be paid out-of-pocket as a result. Once the out-of-pocket is paid and covered, then customers will begin coverage under the actual health insurance provider.

The beauty of catastrophic health insurance plans is the low monthly premium one pays. This works to the advantage of someone who is healthy and may need only the occasional annual checkup along with a few prescriptions here and there. With this type of plan, some pharmacies will offer discounted medications given that one has a discount card from that pharmacy.

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Furthermore, a catastrophic health insurance plan may be eligible for a Health Savings Account (HSA). Think of an HSA as a kind of bank account dedicated for medical expenses. HSAs are not subject to federal taxes and the money put in rolls over to the next year if not used. Funds in an HSA utilized for qualified medical expenses are also not liable to federal taxes.

Only when funds are pulled out of an HSA for non-medical or non-qualifying medical payment, then a penalty may occur. The penalties incurred are similar to those incurred when using an IRA.

Health insurance has been a hotbed of debate lately, with the Obama administration eagerly pursuing the passage of a health care reform bill. The task has proven rather difficult as members from both sides of the fence drag their collective feet over certain language in the bill and the expenses involved with such a proposal.

Should health care reform pass, individuals will have more options when it comes to health insurance. In the mean time, however, catastrophic may be the way to for a healthy unemployed individual to go. As of 2008, the IRS requires people with catastrophic plans to have a minimum deductible of $1,100 for individuals and $2,200 for families. Total out-of-pocket for individuals is $5,600 annually; for families it is $11,200.

Catastrophic health insurance is great for discount drugs and public assistance programs, however, it is important to realize the costs of the plan.