Catastrophic health insurance is a type of medical coverage under the Affordable Care Act. This is a type of high-deductible health plan for people under 30 or those who qualify for a "hardship exemption."
Catastrophic plans are designed to protect you in a worst-case scenario; for example, if you get into a medical emergency and your medical costs total thousands of dollars. Monthly plan premiums tend to be lower, but you'll generally need to pay for all health-care costs out of pocket until you reach the plan's annual deductible, which is usually at least a couple thousand dollars.
Here is an overview of catastrophic coverage works, including benefits, costs, and whether this type of plan may work for your situation.
Catastrophic health plans cover the same minimum health benefits as other health plans under the Affordable Care Act, including preventive services, emergency services, prescription drugs, and more. The difference with a catastrophic plan is that you must pay for all health-care costs until you meet a high annual deductible. Only after your out-of-pocket spending reaches the deductible does your plan begins to pay for most covered health-care services.
The deductible doesn't apply to all benefits. Catastrophic health plans cover the following benefits, even if you haven't met your yearly deductible yet:
You'll pay the full cost for all other health-care services until you meet your yearly deductible. Other cost-sharing expenses, such as copayments and coinsurance, are usually higher with this type of plan. However, monthly premiums tend to be lower compared with major medical plans.
Catastrophic health coverage is different from accident, critical illness, or short-term plans; these types of coverage tend to protect the policyholder in specific, limited situations. For example, critical illness plans insure the policyholder against specific health illnesses. Short-term plans provide limited, temporary coverage when an individual isn't eligible to enroll in a major medical health plan or is waiting for coverage to start. For example, you might enroll in a short-term plan to fill a coverage gap before you're eligible for Medicare.
In contrast, catastrophic plans cover the same essential health benefits as major medical plans once you've met the yearly deductible.
To enroll in a catastrophic health plan, you must meet one of the following eligibility requirements:
If you and all other individuals covered by your health plan are under 30, you may be eligible to purchase a catastrophic health plan.
If you are over 30 and interested in catastrophic health coverage, you must qualify for a hardship exemption. Some examples of hardship exemptions include if you were homeless in the last three years or if you were found ineligible for Medicaid because your state didn't expand its Medicaid program. Other situations may apply; for more information, see this article on hardship exemptions.
If you think you may qualify for an exemption because of financial hardship, you'll need to apply for a hardship exemption through the Marketplace. If you receive a notice stating that you qualify for a hardship exemption, you have the option to purchase a catastrophic insurance plan, and an eHealth licensed insurance agent would be happy to help you find a plan that may work for you. Or you can choose to enroll in a major medical plan instead.
Keep in mind that if you qualify for lower health-care costs because of income (also known as a subsidy), you cannot apply these savings towards a catastrophic health plan. This includes premium tax credits and cost-sharing subsidies. So you'll pay the standard premium amount for your catastrophic insurance plan, regardless of your income level.
A catastrophic plan may be right for you if:
Every situation is different, and you'll have to carefully consider your health needs, budget, and priorities to determine what's best for you. If you have questions about catastrophic coverage or other plan options, feel free to contact eHealth to discuss your needs with a licensed insurance agent.