Insurance -- of all kinds -- is characterized by low premiums and high deductibles with regard to the payout that the insurance policy underwriter will arrange. But we all know that the typical health insurance policy isn’t characterized by this at all. There may be co-pay options or no deductible at all, but almost everything you might see the doctor for is covered if you spend enough money in premiums. And speaking of health insurance premiums, they’re anything but low!
kurhan / 123RF Stock Photo
But in 2004, federal insurance regulations allowed for the creation of what is known to many as “catastrophic insurance coverage”. Traditionally, insurance policies aren’t supposed to cover a wide range of costs. They are supposed to be low-cost hedges against what will be detrimental or even bankrupting events financially if there were no insurance protection. Catastrophic health insurance is limited, compared to the traditional (and ironically uncharacteristic) health insurance plans in the United States, in what events it will pay out for. And, it comes with a high deductible.
So what’s the trade-off? You guessed it: low(er) premiums!