What Is a Catastrophic Plan & How Does It Work?
Discover catastrophic health plans: a vital safety net for major medical emergencies, protecting you from immense costs with a high deductible.
Health insurance provides a financial safety net against unpredictable medical costs. Among various options, a catastrophic health plan offers protection primarily for significant, unforeseen medical events. It is often chosen for its lower monthly premiums compared to other health insurance options. This coverage guards individuals against very high medical bills from serious illnesses or injuries, rather than covering routine healthcare expenses.
Defining a Catastrophic Health Plan
A catastrophic health plan is a type of health insurance designed to protect individuals from the substantial financial burden of major medical emergencies. Its primary function is to act as a safety net, covering costs only after a very high deductible has been met. These plans typically feature lower monthly premiums, making them an affordable choice for those who anticipate minimal medical needs. They are not intended for regular healthcare use, such as frequent doctor visits or managing chronic conditions. Instead, they provide a baseline of coverage for essential health benefits, aligning with the requirements of the Affordable Care Act (ACA).
Eligibility for a Catastrophic Plan
These plans are generally available to individuals under 30 years of age. This age restriction reflects their design, as they are best suited for younger individuals who typically have fewer ongoing health concerns and primarily seek protection against unexpected, high-cost medical events.
Individuals aged 30 or older may still qualify if they receive a hardship or affordability exemption. Hardship exemptions can be granted for challenging circumstances, such as homelessness, eviction, utility shut-off notices, or significant medical debt. Affordability exemptions are available if the lowest-cost health coverage option exceeds a certain percentage of household income, typically around 7.97% to 8.09%. Obtaining these exemptions involves an application process through the Health Insurance Marketplace.
Financial Structure and Covered Services
The financial structure of a catastrophic health plan involves low monthly premiums and a high deductible. While premiums are generally lower than those for other ACA-compliant plans, the deductible is significantly higher. For 2025, the deductible is $9,200 for an individual plan and $18,400 for a family plan. Policyholders are responsible for paying 100% of their medical costs out-of-pocket until this deductible is met.
There is also an out-of-pocket maximum, which caps the total amount an individual or family will pay for covered services in a year. For 2025, this maximum is $9,200 for self-only coverage and $18,400 for family coverage, aligning with the deductible. Once this limit is reached, the plan typically covers 100% of additional in-network medical costs for essential health benefits for the remainder of the year.
Catastrophic plans cover certain essential health benefits and preventive services at no cost, even before the deductible is met. These include an annual check-up, most vaccinations, and specific forms of birth control. Many plans also cover at least three primary care visits before the deductible is satisfied, though a copay may apply. This upfront coverage ensures access to basic preventive care.
Enrolling in a Catastrophic Plan
Enrollment primarily occurs through the Health Insurance Marketplace, accessible via Healthcare.gov or state-specific marketplaces. The online application process involves creating an account, providing personal information, and submitting income estimates. The Marketplace uses this information to determine eligibility, including age verification or the need for an exemption.
Enrollment generally takes place during the annual Open Enrollment Period, usually in the fall for coverage beginning the following year. Individuals 30 or older who qualify for an exemption must obtain an Exemption Certificate Number (ECN) from the Marketplace before selecting a plan. Special Enrollment Periods may allow enrollment outside the standard window if a qualifying life event occurs.