Major Medical and Catastrophic Health Insurance Plans Explained

If you are one of the growing number of Americans who have lost access to employer based medical insurance due to cut backs, or are working for an employer that has been unable to offer such medical benefits in the first place, if you are a young person who has yet to enter the workforce, if you are self-employed - you should at least be considering purchasing major medical insurance or catastrophic health insurance.

As the name implies "catastrophic health insurance" policies are affordable health insurance plans that are designed to protect you from "major" or "catastrophic" healthcare costs, such as hospitalizations, surgeries, high-end diagnostic tests etc. Such plans often carry a high deductibles (which is why they are so affordable) and will not cover your "routine" medical expenses such as doctors visits, drugs etc. They will however usually cover; once the deductibles have been met; hospital stays "high-ticket" healthcare costs such as lab work, intensive care, rehabilitation therapies, x-rays and other diagnostic procedures. If you are basically healthy and do not require many doctor's visits, these major medical health plans make sense - regardless of your health, if you have a limited budget they may be your only option and best defense against financial ruin due to medical expenses. It was estimated that more than half of the bankruptcies filed last year were due to medical bills.

When shopping for a major medical plan also keep in mind, that again in an effort to keep the premiums low, most catastrophic health plans have a lifetime cap - usually between 1 million and 5 million dollars. What that cap is will effect the monthly premium. Once the cap is reached the policy will no longer pay out for any additional medical expenses. You are also responsible for all out of pocket expenses until you reach the deductible amount. Say you select a plan with a very high deductible, like $10,000.00, of course you understand that you will need to cover low cost medical expenses like the few hundred dollars for a doctor visit, and you are probably comfortable with that. But also understand that with a high deductible amount like that if you needed a relatively minor surgical procedure that costs say around $5,000.00 -  you would be responsible for the entire amount. So when evaluating the amount of your deductible for a major medical plan it is important to take an accurate snapshot of your finances and determine how much you could afford to realistically go "out of pocket" for a major medical expense, before you decide on your deductible amount. Also if you are a female, understand that most major medical plans do not offer pregnancy or maternity coverage.  A high deductible catastrophic or major medical plan may also qualify you to open a Health Savings Account to pay for the costs of out of pocket medical expenses before you reach your deductible.

Just how inexpensive can a major medical insurance plan be? One such plan called Essential issued by Blue Cross & Blue Shield of Florida, has only a 250.00 deductible, an out of pocket maximum once you hit the deductible of 2,500.00 and a lifetime cap of 1 million dollars. According to their website the monthly premium for a 21 year old female non-smoker would be 29.00 month!