Catastrophic health insurance provides a form of safety-net coverage designed for individuals under the age of 30 and those experiencing significant financial challenges, such as homelessness or an inability to afford other types of health insurance. These plans are available through the Affordable Care Act (ACA) marketplace and are also offered directly by private insurance companies.
While catastrophic health insurance plans offer the same essential health benefits as ACA plans, they are characterized by significantly lower premiums. However, they also come with high deductibles and out-of-pocket costs, particularly when individuals require medical care.
The Best Catastrophic Health Insurance
- Blue Cross Blue Shield – Best for Provider Network
- Kaiser Permanente – Best for Low Out-of-Pocket Costs
What Is Catastrophic Health Insurance?
Catastrophic health insurance is comprehensive coverage only available to people under 30, those facing major financial problems, such as homelessness, or those who can’t afford any other health insurance.
Catastrophic health insurance plans, offered by private health insurance companies, have high deductibles. But once you reach the deductible, the health plan pays for all of your health care services.
Since catastrophic health insurance offers comprehensive coverage with low premiums, catastrophic plans can be a good option for health insurance for young adults. But remember the high deductible means you’ll pay all of the costs for healthcare services until you reach the deductible except for free preventive care.
Who Qualifies to Buy Catastrophic Health Insurance?
People who qualify for a catastrophic health insurance plan include:
- People who are under age 30
- Anyone who qualifies for a hardship exemption or affordability exemption
Those who may qualify for an exemption need to submit an application for the exemption and receive an Exemption Certificate Number (ECN). You use the ECN to enroll in a catastrophic health plan.
Here’s the difference between the exemptions:
- Affordability exemption. You can qualify for this exemption if the lowest-priced health coverage available to you, such as through an employer or the Affordable Care Act (ACA) marketplace, also called Obamacare, would cost you more than 8.09% of your household income.
- Hardship exemption. A hardship that qualifies for an exemption includes homelessness, filing for bankruptcy, getting evicted or facing eviction or foreclosure. Other qualifying hardships include medical expenses that caused significant debt or experiencing a fire, flood or other natural or human-caused disaster that resulted in substantial property damage.
Being unemployed doesn’t qualify you for a hardship exemption.
How Does Catastrophic Health Insurance Work?
Catastrophic health insurance has premiums, health insurance deductibles and out-of-pocket maximums, but it doesn’t have coinsurance.
Coinsurance is the part of health insurance on a standard health plan when a member splits the costs of health care services with the health plan. This portion comes after the member exceeds the plan’s annual deductible and before the person reaches the plan’s out-of-pocket maximum.
A catastrophic plan doesn’t have coinsurance, and the deductible and out-of-pocket max are the same in a catastrophic plan. Those are major differences between a catastrophic plan and a standard health plan.
Catastrophic health plans instead require that members pay all of the costs for health care services until they reach their plan’s deductible. Once you get to a catastrophic health plan’s deductible—which can be no more than $9,100 per person or $18,200 for a family—the health plan pays for the rest of the health care service costs for the rest of the year.
That means if you have single coverage in a catastrophic health insurance plan, you would need to pay for everything when you see a doctor until you rack up $9,100 worth of medical costs. Once you reach that point, you won’t have to pay anything else except for premiums for the rest of the year.
What Do Catastrophic Health Insurance Plans Cover?
Catastrophic health insurance offers the same level of coverage found in an ACA health insurance plan.
That includes the 10 essential health benefits:
- Ambulatory patient services, also called outpatient care
- Emergency services
- Laboratory services
- Mental health and substance use disorder services
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Pediatric services, including children’s oral and vision care
- Pregnancy, maternity and newborn care
- Preventive and wellness services and chronic disease management
Catastrophic health plans also must cover at least three primary care visits per year before members meet their deductible and cover preventive services at no cost.
How Much Do Catastrophic Health Plans Cost?
The average monthly cost for catastrophic health insurance for someone age 30 is $267. We averaged costs for 95 catastrophic health plans nationwide to find averages.
|Health insurance plan member
|Average monthly cost for Catastrophic health plans
|Adult individual age 21
|Adult individual age 27
|Adult individual age 30
|Adult individual age 40
|Adult individual age 50
|Adult individual age 60
The combination of low premiums and comprehensive coverage may make catastrophic health insurance an appealing option for those looking for affordable health insurance.