Washington State Insurance Practice Exam

What is a primary feature of catastrophic health insurance?

1. It provides full coverage with no deductibles

2. It covers preventive care services at no cost

3. It protects against very high costs after a high deductible is met

4. It offers coverage for routine health visits

The correct answer is: It protects against very high costs after a high deductible is met

The primary feature of catastrophic health insurance is that it protects against very high costs after a high deductible is met. This type of insurance is designed to provide a safety net for individuals facing major health issues or emergencies, while allowing them to pay lower premiums compared to more traditional health insurance plans. In this structure, individuals are responsible for covering their medical costs up to a certain threshold (the high deductible), after which the insurance begins to cover a significant portion of expenses. This allows policyholders to safeguard their financial stability against the burden of unexpected, significant medical expenses. The other options present characteristics that are not typical of catastrophic health insurance. Full coverage with no deductibles implies comprehensive benefits that go beyond the purpose of catastrophic plans. Likewise, coverage for preventive care services at no cost and coverage for routine health visits suggest a more typical health insurance framework, where regular healthcare needs are addressed without the burden of high out-of-pocket costs. These features are not aligned with the primary function of catastrophic plans, which focus on protection against extreme financial risk rather than routine care or preventive services.