NationsHealthInsurance Report | 01-20-2016
The Affordable Care Act offers Millennials under thirty years of age who are on a tight budget a Catastrophic Insurance plan as an alternative to the high cost of even a bronze level Obamacare plan. A catastrophic plan is a bare bones policy that only covers the "worse case scenarios" such as a major illness or injury.1
Considered an Obamacare plan, catastrophic plans do not qualify for a tax subsidy. Individuals must pay the full premium with an average cost of $167.2 This type of insurance plan will cover an annual wellness exam and vaccinations but does not cover any costs until the out-of-pocket requirement of $6,850 is met. According to a recent study by Bankrate, sixty-three percent of Americans do not have enough in their savings to cover even an emergency room bill of $1,000,3 much less one for $6,850.
A term health policy in contrast to a catastrophic plan has an out-of-pocket maximum of $3,500, a co-pay of 80/20 percent (where the insurance pays eighty percent of the covered expenses and the policy holder pays the other twenty percent), and a $2 million lifetime maximum. This term health policy will generally cost a twenty-six year old male $57.43 per month4 that is almost two-thirds less than the cost of a catastrophic policy. Like a catastrophic policy, a term health policy holder must meet the out-of-pocket deductible before the policy will cover any medical costs. With a lower deductible and lower premium a term health insurance policy is the best economic choice for many people.
For example, the average charge for a broken leg is $9,954.5 a policy holder with catastrophic plan would have to pay$6,850 before the insurance would cover any expenses while the holder of a term health insurance policy would pay $3,500. While it would seem natural that the catastrophic policy would cover 100% of the remaining balance that is not always true, most plans will actually only pay for in-network providers leaving the policy holder responsible for the entire amount if the doctor or hospital is not in the network.
A term health insurance policy will cover the services in network or out giving the policy holder the opportunity to choose a provider or hospital. The co-pay for the remaining would cost the policy holder twenty percent after which the insurance would pay 100% for covered services up to the lifetime maximum.
NationsHealthInsurance.com's term health plans offer other advantages such as waiving the deductible for urgent care treatment policy holders are only responsible for $50 for care received at an urgent care facility.
Enrollees in term health may be subject to the Affordable Care Act uninsured tax penalty. However, millions of Americans are eligible for one the numerous exceptions to the tax.6
Even with the penalty, the average twenty-six year old male will save money with a term health policy7 according to a survey conducted by NationsHealthInsurance.com.
While the premium for a catastrophic plan may cost less than other Obamacare health plans, it will only cover in-network costs for major illnesses and injuries services after the $6,850 out-of-pocket deductible is met. For a third of what a catastrophic plan costs Mellenials are free to choose a more robust plan, choose a doctor they trust, and get urgent care for a small co-pay.