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Insurance designed to protect you from having to pay very high out-of-pocket costs. Catastrophic coverage usually begins after you have spent a pre-determined amount on your health care. Original Medicare Part A and Part B do not offer catastrophic coverage. They always pay the same amount regardless of how much you have spent. The Medicare prescription drug benefit (Part D) does offer catastrophic coverage. After you have spent a certain amount out-of-pocket, you will only pay five percent of the cost of each prescription drug (in addition to your monthly plan premium). Medicare private plans, like regional PPOs (Prefered Provider Organizations), may also have catastrophic coverage or caps on out-of-pocket costs, but these caps may exclude certain high cost services. Also, Medicare Medical Savings Accounts (MSAs) must pay all or most of your Medicare Part A and B costs after you have met your deductible.

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