Catastrophic Health Insurance Plans in Georgia
One of the most important reasons to have health insurance is to cover you and your family in the event of an accident or serious illness. Health insurance can help pay for surgery or intensive care as a result of a catastrophic injury. Without health insurance, you could face potential bankruptcy trying to pay back the hospital bill.
Catastrophic health insurance is one of many options you should consider if you need insurance and are a resident of Georgia. A great place to start is by getting
a free online quote.
What is Catastrophic Health Insurance?
Catastrophic health insurance is sometimes referred to as a High Deductible Health Plan (HDHP) or Major Medical because you pay a significantly higher deductible in exchange for a low monthly premium. There are significant differences between these plans, however. A reputable insurance agent can differentiate these insurance plans for you.
A deductible is the out of pocket expense you are responsible for until your insurance plan kicks in; similar to deductibles on auto and home insurance policies. The premium is the amount of money the insurance company charges you to insure you for the year. Your premiums do not count toward your deductible or your out-of-pocket maximum. Catastrophic health insurance is less expensive than traditional insurance because you typically pay out of pocket for doctor visits, prescriptions, and pregnancy care until your “deductible has been met”.
Who Should Consider a High Deductible Health Plan?
People who choose this policy are generally healthy and do not require regular medical attention but want a safety net in case of emergency.The two primary groups of people who buy catastrophic health insurance are young adults in their 20s and adults between the ages of 50 and 64.
Young adults usually purchase this type of health insurance because they are either self employed or are employed but do not receive sufficient health insurance coverage from their employers. This is also popular with college students who are not covered under their parent’s insurance.
Older adults usually purchase catastrophic health insurance to protect themselves and limit their financial liability in case they suffer a heart attack, stroke, are diagnosed with cancer, etc. They are usually rather healthy to begin with and does not require regular doctor visits or prescriptions.
People with preexisting conditions (AIDS, emphysema, heart disease, diabetes, etc.) are usually not eligible for catastrophic health insurance.
The lower monthly premium might be very attractive, but if you do not have funds set aside for your higher deductible, this catastrophic health insurance might not be the best option unless you have a HSA.
How much are the deductibles?
Deductibles vary and are dependent on your insurance plan; but count on deductibles being $1000 and up. To qualify for a High Deductible Health Plan (HDHP) status in 2011, the plan must have a deductible of at least $1,200 for an individual and $2,400 for a family. The maximum deductible per year can be no more than $5,950 for an individual and $11,900 for a family. So if you have a family, your out-of-pocket expenses will be somewhere between $2,400 to $11,900 per year. Under a HDHP, you pay all of your medical expenses up to the annual deductible. After that, some plans pay 100 percent of your covered medical expenses; others pay a share of your medical bills, say 80 percent.
So here is a real life scenario. You and your family have a HDHP with a $8000 deductible. Your little girl had an appendicitis attack and needed to have an appendectomy done, which cost $30,000 in medical bills. You would end up paying $8000 towards her medical expenses since you have a $8000 deductible that you are responsible for up front. Your insurance company would end up paying the remain $22,000 of her medical costs and any other medical bills you acquire for the year. If an $8000 deductible seems too high, consider a lower deductible with slightly higher premiums.
Health Savings Account – HSA
Many HDHPs are coupled with a health savings account (HSA). A Health Savings Account is a saving account that you can make tax-deferred deposits into and the’re to be used for medical expenses only. To get one of these tax-friendly accounts, you must be enrolled in a catastrophic insurance plan but not all HDHPs can be paired with a HSA.
You can contribute up to $3,050 per year in pre-tax dollars to an HSA as an individual or up to $6,150 as a family. You can save an additional $1,000 in the account if you’re 55 or older.
There are many advantages to having a HSA. The funds stay with you even if you leave your employer or end participation in the catastrophic insurance plan. The funds roll over from year to year. You can invest the money accrued in your HSA, with all earnings sheltered from taxation. When you withdraw money for medical expenses, you do not pay taxes. Dental, vision, and long term care are included in qualified medical expenses.
If you withdraw money from your HSA for non-medical expenses before age 65, you will pay a 20 percent tax penalty on top of income taxes. After age 65, you would only pay ordinary income tax.
If you are considering a high deductible health plan or HSA plan, talk to a qualified insurance agent. Make sure you understand how the plan works and what it covers. Figure out if you can afford the deductible and how much the out-of-pocket expenses will cost you. Always
get several quotes online when considering any health insurance or any insurance for that matter.
If you are a good candidate for catastrophic health insurance in Georgia, you will save money each year compared to a more traditional health plan. You will have a safety net in the event a catastrophic illness or accident.