Catastrophic Plan – Affordable Care Act (Obamacare)
A catastrophic plan, otherwise known as catastrophic insurance, is a type of health insurance coverage created by the Affordable Care Act. It is only available to people under age 30 or people who cannot afford other health insurance coverage. Individuals as well as families may purchase catastrophic plans, but every family member on the plan must be eligible for enrollment in a catastrophic plan. In order to enroll in a catastrophic plan, an individual under the age of 30 must obtain certification from an exchange that he or she does not have an affordable coverage option and qualifies for a “hardship exemption.” The following circumstances can qualify people for hardship exemptions:1
- Eviction in past 6 months or facing eviction or foreclosure
- Shut-off notice from a utility company
- Domestic violence
- Recent death of close family member
- Fire, flood, or other disaster that caused substantial property damage
- Filed for bankruptcy in past 6 months
- Unable to pay medical expenses in last 24 months
- Unexpected increases in necessary expenses due to caring for ill, disabled, or aging family member
- Expect to claim a child who was denied Medicaid and Children's Health Insurance Program (CHIP) coverage as a dependent when filing taxes, and another person is legally required to support the child medically
- Eligible for marketplace enrollment in a qualified health plan, lower monthly premium costs, or cost-sharing reductions for a time period when not enrolled in a marketplace qualified health plan, because of an eligibility appeals decision
- Ineligible for Medicaid because state did not expand eligibility under the ACA
- Individual insurance cancelled and other marketplace plans unaffordable
A catastrophic plan provides the same essential benefits as the other health insurance plans created by the Affordable Care Act but requires a high deductible to be met before the plan pays for health care costs. However, the deductible does not have to be paid for the following:
- 3 annual primary care visits
- Preventive care
Primary care visits are visits to the enrollee’s doctor, or other healthcare provider, who serves as the principal point of consultation for healthcare services. Preventive care includes services provided to prevent illness or disease from occurring, but does not include care related to existing health problems or new issues. Most insurers will cover one preventive visit per year with no charge.2
Catastrophic plans should typically cost less than the entry-level Bronze plans within the Affordable Care Act. However, catastrophic plans do not qualify for premium tax credits or cost-sharing reductions.3 Before enrolling in a catastrophic plan, an individual should confirm that he or she would not pay less for another qualified health plan that is eligible for premium tax credits and cost-sharing reductions.
Catastrophic Plan Enrollment Numbers
According to the Health and Human Services report for marketplace enrollment between October 1, 2013 and February 1, 2014, only 1% of persons selecting a marketplace plan chose a Catastrophic plan. For states running their own marketplaces, 1% of persons selecting a plan chose a Catastrophic plan. For the federally-facilitated marketplace (FFM), also 1% of persons selecting a plan chose a Catastrophic plan. Specifically in the FFM 1% of females and 1% of males selecting a plan chose a Catastrophic plan.
In terms of plan selection by age, 1% of persons selecting a plan in the FFM under the age of 18 chose a Catastrophic plan. Moreover 5% of persons aged 18-25 and 3% of persons aged 26-34 selecting a plan in the FFM chose a Catastrophic plan. However in every other age group 0% of persons selecting a plan in the FFM chose a Catastrophic plan, since only people under age 30 and people with hardship exemptions were eligible for catastrophic plans.