A Basic Explanation

Catastrophic coverage is health insurance that primarily protects you from medical bankruptcy if you suffer a serious accident or illness. It’s the least generous type of health insurance that still satisfies the new healthcare law’s mandate.

Here’s what you get when you buy a marketplace catastrophic plan: free preventive care; up to three visits to the doctor when you’re sick or injured; plus coverage for emergencies, hospitalizations, or other medical care once you’ve met your deductible, as long as you’re seeing in-network providers.

Under the Affordable Care Act (ACA), the only people who have the option to buy catastrophic health insurance on one of the marketplaces are those under 30, or adults who obtain special permission.

Expert Advice About Catastrophic Plans

Catastrophic plans have lower monthly premiums, so they cost less up front. You’ll likely be able to find a marketplace catastrophic plan for a monthly premium* that ranges anywhere from [$49] to [$757] depending on how old you are and where you live.

But there’s a drawback: If you choose a catastrophic plan, you’ll pay more out of your own pocket when you do see a doctor.

1. You’re on a tight budget . . . Catastrophic monthly premiums are much, much more affordable than other metal tier options, so they’ll appeal to you if you’re trying to keep your monthly spending low.

2. . . . and you don’t qualify for tax credits or cost-sharing reductions. If you’re buying catastrophic coverage, you’ll be responsible for the entire monthly premium on your own. You can’t use any tax credits or cost sharing reductions for these types of plans. Before you settle on a catastrophic plan, be sure to find out whether you’re eligible for federal help to pay for your insurance. Try the Subsidy Estimator or call us to see if you qualify. If tax credits are available to you, take the time to shop for plans with better benefits — they might be on par or even more affordable than catastrophic once you figure in the money the government will be giving you.

3. You’re generally healthy. If you think you can get by with just your annual preventive care check-ups plus three sick-or-injured visits to your doctor per year, and if you don’t have a lot of prescriptions to fill, specialists to see, or a pre-existing condition, a catastrophic plan might offer adequate coverage.

Remember, though, these plans are designed to protect you from getting clobbered by giant medical bills in the event of a serious illness or injury. They don’t do much to help you with everyday scrapes, aches, and flus. If you have a pre-existing condition or use a lot of medical care, a catastrophic plan could actually end up being a more expensive option because you’ll be paying so much out of your own pocket.

4. You’re under 30, or you qualify for a hardship exemption. There are some age restrictions on who can buy a marketplace catastrophic plan: If you’re over 30, you’re likely out of luck. However, if you’ve had some sort of hardship that makes it difficult for you to purchase any other type of plan, you may be able to get what’s called a hardship exemption — in other words, special permission to purchase catastrophic coverage.

5. You like the peace of mind that comes from having insurance. Some people call these plans “safety net” coverage — its there just in case something really bad happens. Even if you’re healthy and you don’t think you’ll use healthcare at all, a catastrophic plan might help you sleep better at night (because, as we all know, accidents and unexpected illnesses happen).

*Premiums are usually but not always billed monthly. They may also be paid quarterly, semi-annually, or even annually.