What are critical illness plans? Can I buy one through the exchange?
A critical illness plan pays benefits directly to the policyholder should the policyholder be diagnosed with one of the significant diseases or medical problems covered by the plan. These plans are not available through federal or state health insurance marketplaces and will need to be purchased off the exchange or through one’s workplace.
Critical illness plans are becoming increasingly popular as a voluntary benefit offered by employers. Small employers in particular like to offer plans like this since they provide employees with some form of coverage but, unlike comprehensive health insurance, the employer is not required to make any financial contributions of their own. Larger companies may choose to offer this kind of coverage as a way to lessen the impact of switching employees to a plan with a higher deductible. Critical illness plans are also popular with individual buyers looking to supplement high-deductible health plans purchased off the exchange.
Critical illness plans provide coverage for serious diseases and medical problems such as strokes, heart attacks, and cancer. It is important to note that coverage is only provided for medical conditions specifically mentioned in the details of the plan. Anything that is not explicitly listed will not be covered. This limitation is why critical illness plans, along with short-term plans, accident supplements, and limited benefit plans, are not considered minimum essential coverage. As such, these plans are also not subject to the Affordable Care Act’s rules and regulations. This means that they do not provide essential health benefits and can still use medical underwriting, which means you may be denied coverage due to a pre-existing condition. Because of this, one should never rely on a critical illness plan as one’s sole source of coverage. Critical illness plans are best used as a supplement to a comprehensive plan obtained through work or through the exchange. Because they are not considered minimum essential coverage, you will still be eligible for subsidies on your exchange plan if critical illness is the only form of coverage offered through your employer.
Some experts have raised questions about whether critical illness plans are worth the money and whether those who purchase them fully understand the nature of the plans and their limitations. While these plans are certainly not right for everyone, they do have their uses. For example, they can provide great peace of mind for those whose existing health plan has a high out-of-pocket maximum. Just remember that these plans do only provide coverage for specific conditions and that they should be used as supplemental insurance rather than stand-alone coverage.
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