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Insurance is a product that you buy in hopes of never having to use it. The reason you have any kind of insurance -home, auto, health- is to protect yourself in case of an emergency.  

You have homeowners insurance so you can replace your home in case your house burns down. You have car insurance to protect yourself and repair your car, in the event of an accident.  Right? 

Well, you have health insurance for many reasons. One of the most important reasons for health insurance is that it covers major hospital expenses such as surgery or intensive care when you need it.  Without health insurance, you could face potential bankruptcy trying to pay back the hospital bill. If you are a Minnesota resident looking for catastrophic health insurance, you have come to the right place.

What is catastrophic health insurance?

Catastrophic health insurance is a high deductible, low premium health insurance policy. Catastrophic health insurance is often called a high deductible health plan (HDHP), major medical plan and HSA plan. There are subtle differences between these terms, but for purposes of this article, the terms will be used interchangeably. 

A deductible is the amount of money you must pay out of pocket first, before the insurance company will begin paying for claims.  The premium is the amount of money the insurance company charges you to insure you over a year.  Your premiums do not count toward your deductible or your out-of-pocket maximum.  A high deductible health insurance plan (HDHP) is one with a minimum deductible of $1,100 for an individual policyholder and $2,200 for a policy that covers the whole family.

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”.  Traditional plans have lower deductibles and higher premiums.  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 and others pay a share of your medical bills, say 80 percent.

People who choose this policy should be sure that they have enough money set aside in order to pay their deductible. It is this reason that many HDHP are coupled with Health Savings Accounts (HSA).

Health Savings Account (HSA)

There are several benefits to having a HSA. This savings account are designed to pay for medical expenses only.  Deposits made to the HSA are tax-deductible, and can accumulate interest on a tax-free basis until they are withdrawn to pay for eligible health medical expenses. 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.  When you withdraw money for medical expenses, you do not pay taxes. Dental, vision, and long term care are included in qualified medical expenses.

An individual can open an HSA with a high-deductible health insurance plan if they are not covered under another health insurance policy and they are not enrolled in Medicare. A Health Saving Account can be combined with accident, cancer, dental, hospital protection, or vision care insurance. The funds in the HSA are used to pay for eligible expenses until the amount of the annual deductible is met.

Annual contribution limits for an HSA are set by the government. The limit for 2010 is $3,050 for an individual and $6,150 for family coverage. HSA account holder 55 years of age or older can contribute an additional $1,000 to their HSA each year.

Advantages to a Catastrophic Health Plan or HDHP

• Lower premiums per month – You can get a decent policy for less than $100 a month.
• High deductibles – You pay for your doctor visits, prescriptions, etc. until your deductible has been met.  Likewise, if you do not need to see the doctor or need to fill a prescription, you will not be spending any money toward your deductible.
• You are covered for a catastrophic medical event such as surgery, hospitalization, cancer treatment, etc.
• Hospitals often charge more you more if you do not have insurance of any kind.  Why?  Insurance companies can use their buying power to negotiate discounts for their consumers.
  You can get tax benefits by using Health Savings Accounts (HSAs) in conjunction with a catastrophic insurance plan/HDHP.
• Getting insurance now and keeping that insurance guarantees that you will have access to insurance as you get older. It
  is sometimes impossible for people to get insurance if they have heart disease or other age related illnesses later on in life.

Rather than going completely without health insurance, consider purchasing a catastrophic health insurance policy.  Catastrophic Health Insurance or a HDHP with an HSA, are affordable options and provide a safety net  for residents in Minnesota. 

Get 5 free quotes online now .  There is no obligation to buy and it is a great way to start the insurance process.