Karen, a self employed Personal Trainer, had expressed to me an interest in catastrophic insurance as an alternative to traditional individual health insurance plan. She said the rates are very reasonable but wanted to think about it. When I followed up with her a week or so later, she told me she is undecided. A month later, I saw Karen at a Chamber of Commerce luncheon and she told me she still wanted to hold off on spending money for an insurance policy she feels she will never need. She said her car needs major repairs and she is getting ready to go on a vacation to Mexico. I told her to call me if she has any questions or needs any assistance.
I saw Karen again six months later, at another Chamber function and she told me she is feeling great, had a wonderful trip and her car is running well now. She thanked me for all my help, but she still does not think she’ll need the insurance because as a personal trainer, she is in excellent health. A year later, I heard from an acquaintance that Karen was diagnosed with Breast Cancer. A few weeks later, Karen wanting to know if she can still apply for a catastrophic health insurance policy. That would be like contacting Geico and asking them for car insurance after you’ve just been in an accident and totaled your car. Last I heard, Karen sold her townhouse and moved back home to live with her Mother.
“Catastrophic” and “high deductible” health insurance plans are two names for the same type of plan. The word “catastrophic” refers to a major illness or injury. If you have a heart attack, stroke, cancer or a major accident for example, a “high deductible” health insurance plan will enable you to pay the exorbitant hospital and doctor fees. The deductibles for this type of policy are typically $5,000, $7,500, $10,000, or $12,500 for examples.
This type of plan design is becoming increasingly popular. One of the reasons is that high deductible plans have the lowest monthly premiums. Every year, 87% of people who own health insurance policies do not meet their deductible. Most people find catastrophic health insurance attractive because of the low cost. If something major happens they will have insurance to cover the most expensive parts of their bill, which are hospital and doctor fees.
I advise anyone to consider this as an option if you are healthy and normally only see your doctor once a year for your annual exam.
