What Is a Catastrophic Health Plan?

A catastrophic health plan serves as a financial safety net, protecting individuals from high costs associated with severe medical events like major illnesses or accidents. These plans feature lower monthly premiums compared to traditional health insurance. However, their core characteristic is a very high deductible, meaning policyholders pay for most medical services out-of-pocket until that deductible is met. The design emphasizes coverage for major, unforeseen health crises rather than routine medical care.

Defining Catastrophic Health Plans

A catastrophic health plan is a specific type of health insurance policy established under the Affordable Care Act (ACA) to provide essential coverage primarily for major health emergencies. These plans are structured with a very high deductible, which is the amount an individual must pay for covered healthcare services before the insurance plan begins to contribute financially. For example, in 2025, the deductible for an individual catastrophic plan is set at $9,200. This high deductible is equal to the annual out-of-pocket maximum, meaning once the deductible is satisfied, the plan covers 100% of in-network essential health benefits for the remainder of the year.

Catastrophic plans feature lower monthly premiums compared to other Health Insurance Marketplace options. Individuals enrolled in these plans are not eligible for premium tax credits or other subsidies. Policyholders are responsible for a substantial amount of their medical costs before the plan’s benefits activate.

Eligibility Requirements

Enrollment in a catastrophic health plan is limited to specific groups of individuals. Generally, these plans are available to individuals under 30 years of age. This age criterion acknowledges that younger individuals typically have fewer ongoing health needs and are less likely to incur significant routine medical expenses.

For individuals aged 30 or older, access to a catastrophic plan is possible only if they qualify for a specific exemption. There are two primary types of exemptions: a hardship exemption or an affordability exemption. A hardship exemption is granted in various challenging life situations, such as homelessness, eviction, bankruptcy, significant medical debt, or experiencing a natural disaster.

An affordability exemption may be granted if the lowest-priced health coverage available through the Health Insurance Marketplace or an employer-sponsored plan would cost more than a certain percentage of the individual’s household income. For instance, in 2025, this threshold could be around 7.28% of income. Obtaining either a hardship or affordability exemption requires an application through the Health Insurance Marketplace, which, if approved, provides an Exemption Certificate Number (ECN) necessary for enrollment.

Coverage Details and Deductible Application

Catastrophic health plans, like all plans sold on the Health Insurance Marketplace, are mandated by the Affordable Care Act to cover ten essential health benefits. The plan’s high deductible applies to most of these services, meaning the enrollee is responsible for the full negotiated cost until the substantial deductible is met.

These benefits include:
Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance use disorder services
Prescription drugs
Rehabilitative and habilitative services
Laboratory services
Preventive and wellness services
Pediatric services

A notable exception to the deductible rule is preventive care, which is covered at 100% without any out-of-pocket cost to the enrollee, even before the deductible is satisfied. This includes annual physicals, routine immunizations, and various health screenings for conditions like diabetes, high blood pressure, and certain cancers, as recommended by medical guidelines.

Additionally, catastrophic plans typically cover a limited number of primary care visits before the deductible is met, often up to three visits per year. For all other medical services, including routine doctor visits beyond the initial few, specialist appointments, and most prescription drugs, the enrollee pays the full negotiated price until the high deductible is satisfied. Only after reaching this financial threshold does the insurance plan begin to cover the remaining costs for essential health benefits.

Enrolling in a Catastrophic Plan

Individuals interested in a catastrophic health plan primarily enroll through the Health Insurance Marketplace, which operates through healthcare.gov or state-specific exchanges. The main period for enrollment is the annual Open Enrollment Period, which typically occurs in the fall for coverage beginning the following year. Outside of this period, a Special Enrollment Period may be available due to qualifying life events, such as marriage, birth of a child, loss of other health coverage, or a change in residence.

To begin the enrollment process, individuals typically create an account on the Marketplace website and provide necessary personal and financial information. If aged 30 or older, they will need to apply for and receive an Exemption Certificate Number (ECN) from the Marketplace before they can select a catastrophic plan. Once the ECN is obtained, it is entered during the application to confirm eligibility. While some catastrophic plans might be available directly from private insurers outside the Marketplace, those plans may not offer the same consumer protections or streamlined application process. It is important to note that premium subsidies cannot be applied to catastrophic plans, which could mean other plans, such as Bronze-level options, might be more financially advantageous for some individuals, even with slightly higher premiums.