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.
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:
The fundamental difference among the new Obamacare health plans is the percentage of covered medical costs paid by the health plan. There is no actuarial value associated with catastrophic plans but other Obamacare metal plans pay a higher percentage of these costs.
The monthly premium for a Catastrophic Plan depends on the insurer from whom you purchase the plan, the number of people to be insured by the plan, your age, whether you smoke, and the region in which you live. You can use HealthPocket’s comparison tool to compare Catastrophic Plan premiums in your area.
The first Open Enrollment period for the new Affordable Care Act health plans began October 1, 2013 and ended March 31, 2014. However, some individuals who qualified for a special enrollment period were allowed to enroll past the March 31st deadline. The 2015 open enrollment period will be from November 15, 2014 to February 15, 2015. See our Open Enrollment article for more information.
Heath insurance coverage is considered unaffordable if the cost exceeds 8% of your annual household income. If you are eligible for employer-sponsored health insurance, affordability is determined by comparing how much you must pay (also known as employee share) for the cheapest option your employer offers with your annual household income. If you are not eligible for employee-sponsored health insurance, affordability is determined by comparing the cost of the lowest bronze plan offered on-exchange in your state of residence with your annual household income.
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.
The Department of Health and Human Services (HHS) released a report in May 2014 on marketplace enrollment covering the start of open enrollment for Obamacare, October 1, 2013 to April 19, 2014. Although March 31, 2014 was the original enrollment deadline, some individuals qualified for a special enrollment period and selected plans after March 31st. Only 2% of individuals who selected a marketplace plan either on the Federally-facilitated marketplace (FFM) or a state-based marketplace (SBM) chose a catastrophic plan. Fewer individuals selected a catastrophic plan than any other metal level, which is to be expected due to the age and/or income restrictions of the plan discussed earlier. By gender, 1% of women and 2% of men selected a catastrophic plan on the FFM. The table below provides information on the age distribution of individuals who chose a catastrophic marketplace plan. For each age group the percent of catastrophic total represents the proportion of individuals who selected a catastrophic plan that were in the age group. The percent of age group total represents the proportion of individuals in the age group who selected a catastrophic plan.
|Age Group||Number of Individuals that Selected a Catastrophic Plan on FFM||% of Catastrophic Total||% of Age Group Total|
|Age Under 18||2,287||3%||1%|
|Age 65 or Over||N/A||N/A||N/A|
*Due to few individuals ages 45-64 selecting a catastrophic plan and rounding
Like other metal plans, catastrophic plans can be obtained through the Federally-facilitated marketplace or a state-based marketplace (also referred to as on-exchange) or through a private insurance company (also referred to as off-exchange). The exchange status of a plan does not affect whether or not it covers the ACA’s minimum essential health benefit requirements, and all metal plans sold on- or off-exchange must meet these standards. Typically the benefits and cost-sharing for the same catastrophic plan (plan with same name for the same individual and rating area) purchased on- or off-exchange are the same. Premiums for the same catastrophic plan offered by the same insurer on- or off-exchange are also generally similar, if not the same.