What is catastrophic health insurance?

A catastrophic health insurance plan is an ACA plan that offers low monthly premiums with a high deductible. It’s designed to provide a low-cost alternative for people who don’t anticipate a lot of regular healthcare costs.

What does catastrophic health insurance cover?

Catastrophic health plans cover up to three doctor visits each year, as well as routine vaccines and preventative care. Catastrophic health insurance also covers the 10 essential services required by the ACA after the deductible is met:

  • Emergency services
  • Outpatient care and physicians
  • Hospitalizations
  • Pregnancy, maternity and newborn
  • Mental health and substance abuse disorder
  • Prescription drugs
  • Rehabilitation services
  • Lab work
  • Preventative, wellness and chronic disease management
  • Pediatric services, including dental and vision

What does catastrophic health insurance not cover?

A catastrophic plan won’t cover anything other than three office visits and preventative care until your deductible is met. 

In addition, exclusions on catastrophic plans are similar to any other health insurance plan. Plans may vary by provider, but most don’t cover elective procedures, such as cosmetic surgery. Experimental treatments are also commonly excluded.

Who qualifies for a catastrophic plan?

Unlike other health plans, the ACA limits catastrophic health insurance to only two groups of people:

  • People under 30
  • People over 30 who qualify for hardship and affordability exemptions

Possible reasons for hardship exemptions are:

  • Eviction
  • Homelessness
  • Facing eviction or foreclosure
  • Bankruptcy
  • Domestic violence
  • Damages to your home in a disaster
  • A sudden need for you to care for a disabled or aging family member

Go to your state’s health insurance exchange to see if you qualify for a hardship exemption. Catastrophic health plan quotes should appear when you search for plans if you’re eligible. If you don’t see the option, you can request a hardship exemption.

How much is catastrophic health insurance?

A 2022 eHealth analysis found that the average cost of catastrophic insurance is $173 a month.

However, catastrophic plans have a much higher deductible, $8,700 in 2022 according to the Kaiser Family Foundation. Only preventative care and three office visits each year are exempt from the deductible.

Compared to the monthly rates for the other ACA plans, a catastrophic plan is very affordable:

  • Lowest-cost bronze plan: $329
  • Lowest-cost silver plan: $428
  • Lowest-cost gold plan: $462

One benefit of a catastrophic health plan is that, unlike other health plans, catastrophic health insurance doesn't have coinsurance. It will cover you at 100% after you meet the deductible.

How to get a catastrophic health plan

If you qualify, you can get a catastrophic health plan through your state’s ACA marketplace, also called the exchanges. You can start by going to healthcare.gov, which will help you find your state’s page.

If you are applying based on hardship, you can fill out an application requesting a hardship exemption and submit it to your state. 

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COBRA

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People who lose their employer-sponsored health insurance may qualify for a COBRA plan. COBRA lets you keep your former employer's health plan, but you're responsible for paying all of the costs, including your former employer's portion.
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Medicare

People who are 65 and over qualify for Medicare. You can choose Original Medicare (also called Parts A and B), which is offered by the federal government, or Medicare Advantage (also called Part C), which private insurers provide. The average annual premium for Original Medicare is about $1,600. Medicare Advantage's average yearly premium is $336, but you may have higher out-of-pocket costs than Original Medicare.
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Medicaid

Low-income Americans qualify for Medicaid. Thirty-eight states expanded Medicaid eligibility, so lower-middle-class Americans may also be eligible in those states. Medicaid offers comprehensive benefits, but at little to no cost depending on your income. Each state has its own eligibility. Some states are flexible with Medicaid eligibility for people who are pregnant, a parent or disabled. If your household income is below 138% of the federal poverty level, you're likely eligible for Medicaid if you live in a Medicaid expansion state. That level is $17,609 for an individual, $23,791 for a family of two, $29,974 for a family of three and $36,156 for a family of four. Non-Medicare expansion states have stricter income guidelines. Check with your state's Medicaid program to see if you qualify.
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Parent's employer-based health insurance

The Affordable Care Act lets children stay on a parent's health plan until the age of 26. Having a child on a parent's health plan may or may not increase premiums. It depends on whether you already have family coverage when adding the child to the plan. If a parent already has family coverage, adding a child won't likely increase premiums. However, going from single or couple to family coverage could cause premiums to skyrocket. The average single coverage employer-sponsored plan premium is $1,186. The average family plan is $5,447.
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Spouse's employer-based health insurance

Most employers allow employees to add spouses to their health insurance. Going from single health coverage to a family plan may triple or quadruple your premiums. The average single coverage employer-sponsored plan premium is $1,186. The average family plan is $5,447. Not all jobs allow for spouse's coverage, so you'll want to check with your employer to make sure it's an option.
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Employer-based health insurance

Most people with private health insurance get their coverage through a job. employer-sponsored health insurance is usually cheaper than individual health insurance unless you qualify for Affordable Care Act subsidies. Job-based plans are generally less expensive because businesses often pick up more than half of employer-sponsored health insurance premiums. Kaiser Family Foundation estimates the average premiums for a single coverage employer-sponsored health plan is $1,186 and the average family plan is $5,447 annually.
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Employer plans are often one of these types of four plans. Click on each one to find out more.
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Preferred-provider Organization (PPOs)

  • Pay higher premiums with a lower deductible
  • You have access to more providers, but pay much more for health insurance
  • You don't want to choose a primary care physician
  • You don't want to get a referral
  • You want the ability to get out-of-network care
Preferred-provider organization (PPOs) plans are the most common type of employer-based health plan. PPOs have higher premiums than HMOs and HDHPs, but those added costs offer you flexibility. A PPO allows you to get care anywhere and without primary care provider referrals. You may have to pay more to get out-of-network care, but a PPO will pick up a portion of the costs.
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Health maintenance organization (HMO)

  • Pay higher premiums with a lower deductible
  • Restricted network of providers with lower premiums
  • You want to choose a primary care physician
  • You don't mind getting a referral
  • You don't care about the ability to get out-of-network care
Health maintenance organization (HMO) plans have lower premiums than PPOs. However, HMOs have more restrictions. HMOs don't allow you to get care outside of your provider network. If you get out-of-network care, you'll likely have to pay for all of it. HMOs also require you to get primary care provider referrals to see specialists.
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High-deductible health plans (HDHPs)

  • Pay lower premiums with a higher deductible
High-deductible health plans (HDHPs) have become more common as employers look to reduce their health costs. HDHPs have lower premiums than PPOs and HMOs, but much higher deductibles. A deductible is what you have to pay for health care services before your health plan chips in money. Once you reach your deductible, the health plan pays a portion and you pay your share, which is called coinsurance.
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Exclusive provider organization (EPO)

  • Restricted network of providers with lower premiums
  • You don't want to choose a primary care physician
  • You don't want to get a referral
  • You don't care about the ability to get out-of-network care
Exclusive provider organization (EPO) plans offer the flexibility of a PPO with the restricted network found in an HMO. EPOs don't require that members get a referral to see a specialist. In that way, it's similar to a PPO. However, an EPO requires in-network care, which is like an HMO.
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Individual insurance/Affordable Care Act
The Affordable Care Act created insurance exchanges that allow people to compare plans. The health law also requires insurers to accept everyone and not charge them exorbitant rates. People who make below 400% of the federal poverty level qualify for subsidies to help pay for an ACA plan.
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Individual insurance/Affordable Care Act
The Affordable Care Act created insurance exchanges that allow people to compare plans. The health law also requires insurers to accept everyone and not charge them exorbitant rates. People who make below 400% of the federal poverty level qualify for subsidies to help pay for an ACA plan.
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People who would prefer to pay lower premiums with a higher deductible may want the below plans
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Silver is the second most popular plan in the ACA exchanges, with 35% of people with a Silver plan. Silver has lower premiums than any plan except for Bronze. However, it has lower out-of-pocket costs than Bronze. Silver plans pick up 70% of the costs, while members pay 30% The average single coverage in a Silver plan is $481 monthly and $1,179 for a family plan.

Bronze is the most popular type of plan in the ACA exchanges, with 41% of members with a Bronze plan. These plans have the lowest premiums, but also the highest out-of-pocket costs in the exchanges. Bronze plans pick up 60% of the costs, while members pay 40%. The average single coverage monthly cost in a Bronze plan is $440 and $1,080 for a family plan.

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Individual insurance/Affordable Care Act
The Affordable Care Act created insurance exchanges that allow people to compare plans. The health law also requires insurers to accept everyone and not charge them exorbitant rates. People who make below 400% of the federal poverty level qualify for subsidies to help pay for an ACA plan.
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People who would prefer to pay higher premiums with a lower deductible may want the below plans
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Platinum plans have the highest premiums but the lowest out-of-pocket costs. So, you pay more for the coverage initially but less than other plans when you need health care services. Platinum plans pick up 90% of the costs, while members pay 10%, Not many health insurers offer Platinum plans. Only 2% of members in ACA plans have a Platinum plan, so you may have trouble finding one. The average monthly premiums for single coverage in a Platinum plan is $706 and the average family coverage costs $1,460.

Gold plans have lower premiums than Platinum, but higher premiums than Silver and Bronze. Gold also has lower out-of-pocket costs than Silver and Bronze, but higher than Platinum. Gold plans pick up 80% of the costs, while members pay 20%. The average monthly premium for a single Gold plan is $596. Family coverage averages $1,426 per month.

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Is catastrophic insurance worth it?

Catastrophic health insurance isn’t for everyone. Even if you are eligible, this type of plan might not be a good fit for you.

Catastrophic health insurance offers preventive care and protects you in case of emergencies. However, if you have prescriptions or have a condition that requires regular doctor visits, catastrophic health insurance is likely not a good fit for you.

There are other options to consider, some of which are low-cost:

  • Medicaid. Medicaid is a federal/state health insurance program for low-income Americans. 
  • Other ACA plans. Subsidies are available if you meet income requirements, which can make other ACA plan options more affordable.
  • Short-term health insurance. Short-term health plans have low premiums but are limited and are only a temporary solution.
  • COBRA. If you recently lost your job, you may be eligible for COBRA, which allows you to keep your former employer’s health insurance, but is very expensive.

Catastrophic plans are one way to get affordable health insurance, but you may not qualify. Even if you do, out-of-pocket costs are high when you need care, so make sure to weigh the pros and cons of catastrophic health insurance before you buy.

Sources:

  1. Catastrophic Health Insurance: Definitions and costs
  2. What is a Catastrophic Health Plan?
  3. Average Marketplace Premiums by Metal Tier, 2018-2022
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