Affordable Care Act

Catastrophic Health Insurance

Updated on February 12, 2020


The Affordable Care Act (ACA or Obamacare) created a class of major medical health insurance plans for individuals and families where all of the policyholders are under the age of 30.
Prior to the ACA, the term “catastrophic health insurance” was used more liberally to describe a much wider variety of health insurance plans and medical indemnity plans all of which were constructed to provide an emergency safety net to protect you against unexpected medical costs.

Major Medical Catastrophic Health Plans

By law, a major medical catastrophic health plan must meet all of the ACA’s coverage requirements, but it will only cover three primary care visits per year before the plan’s deductible is met. In exchange for higher out-of-pocket costs, the monthly payment for catastrophic health plans are typically lower what one will pay for a major medical plan with a metallic rating, like a Bronze, Silver, Gold or Platinum health plan.
Catastrophic plans differ from other major medical plans in a few ways:

  • Under 30: All applicants on the policy must be under the age of 30. Hardship exemptions may be available for those over 30 if non-catastrophic major medical plans in your area are not affordable.
  • No subsidies: Although catastrophic major medical plans do meet all of the ACA standards for coverage, they cannot be purchased using an Obamacare subsidy (premium tax credit).
  • No tax penalties: Because major medical catastrophic health plans do meet ACA standards, enrollment in a catastrophic health plan will protect you from uninsured tax penalties, provided you maintain coverage throughout the year.
  • Primary care visits: These plans must also cover at least 3 primary care visits per year before you’ve met your deductible.

Other forms of “catastrophic” health coverage

Individuals with, or without major medical health insurance may want to consider other forms of health insurance that provide protection from high out-of-pocket costs for catastrophic illness and injuries.

What other types of catastrophic coverage are available 

Catastrophic health insurance plans vary, but they generally include the following:

  • Critical-illness insurance: This plan pays you a lump sum if you are diagnosed with cancer, heart attack, stroke, and certain other serious illnesses.
  • Accident insurance: This plan gives you a cash payout in case of covered accidents (separate from your automobile accident coverage).
  • Fixed-benefit indemnity medical insurance: This plan provides cash payouts if you suffer from specific illnesses or injuries covered by your policy.

Be aware that these other forms of catastrophic coverage don’t meet the minimum essential coverage required by the Affordable Care Act (ACA or “Obamacare”), so if you have a catastrophic plan, you may still be subject to the tax penalty if you don’t simultaneously have a major medical insurance plan.

Cost of catastrophic health insurance plans 

eHealth’s 25-City Analysis
Plan Metallic LevelAverage PremiumAverage Deductible

To help find the right health plan for you, enter your zip code where requested on this page to see a quote.

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