What is catastrophic health insurance?
Obamacare catastrophic plans are low-premium, high-deductible health insurance designed to offer some financial protection against expensive, unexpected medical bills. Only certain populations qualify for this affordable coverage.
Major medical insurance falls into 4 metal level categories under the Affordable Care Act (ACA): bronze, silver, gold and platinum. But did you know there’s a 5th Obamacare plan type that’s designed to help provide affordable health insurance to certain populations?
It’s called catastrophic health insurance, and it’s an option you may qualify for if you are under 30 or qualify for a hardship or affordability exemption from the individual mandate.
What is a catastrophic health plan + what does it cover?
A catastrophic health plan is pretty much what it sounds like: an insurance plan designed for worst-case scenarios. Catastrophic coverage is designed to protect against high out-of-pocket costs associated with medical bills incurred due to an accident or unexpected illness.
Under the Affordable Care Act, catastrophic plans cover1:
- Essential health benefits, as defined by the ACA
- Certain preventive services at no additional cost (deductible does not apply)
- 3 primary care visits per year before you’ve met your deductible
Catastrophic health insurance plans work like other major medical plans; your deductible must be met before most benefits kick in.
Are catastrophic plans minimum essential coverage?
Yes! If you’re eligible for a catastrophic plan, it fulfills the ACA’s individual mandate and you will not owe a tax penalty.
So, if catastrophic coverage includes essential health benefits, preventive services and some primary care visits, how exactly does it differ from an Obamacare plan?
It all comes down to the monthly premium cost and annual deductible amount.
How much does catastrophic health insurance cost?
By design, catastrophic plans typically have lower monthly premiums and higher deductibles than traditional major medical insurance (i.e., bronze, silver, gold, platinum Obamacare plans).
Additionally, copayments and coinsurance tend to be higher than other types of major medical plans.2
It’s also good to note that those who buy catastrophic coverage will be responsible for paying the entire premium and are not eligible for subsidies. Catastrophic plans do not qualify for premium tax credits or cost-sharing reductions.
Compare catastrophic health plans to major medical:
Premiums tend to be lower
Lowest-cost monthly premium3
|Bronze plan (unsubsidized)||$212.36|
Deductibles are higher
|Bronze plan (highest)||$7,050|
|Catastrophic plan (same across the board)||$7,350|
Subsidies do not apply
Lowest-cost monthly premium5
|Bronze plan with a subsidy||$81.36|
|Catastrophic plan average (unsubsidized)||$161.27|
What’s the best deal – Obamacare or catastrophic coverage?
It is possible you could qualify for a low-cost or no-cost bronze plan with a deductible that is lower than a catastrophic plan deductible. How so?
In 2018, bronze plan rates increased less than silver plan rates, and premium tax credits are based on the second-lowest-cost silver plan in an area. As such, there were a number of counties across the United States where some individuals’ tax credits covered the full premium cost (or most of it) for the lowest-cost bronze plan available.6
The Henry J. Kaiser Family Foundation compiled a map to indicate counties where the lowest-cost bronze plan premium costs nothing after a tax credit is applied in 2018. You can view the map here, or estimate your premium subsidy using our Health Insurance Cost and Subsidy Calculator.
Who qualifies for catastrophic coverage?
Obamacare allows people under age 30 and people of any age who qualify for a hardship or affordability exemption to enroll in catastrophic health plans.7
Affordability (income-related) exemptions include situations in which your income doesn’t meet tax-filing requirements or the lowest-priced major medical plan available to you exceeds 8.05%.
There are 14 hardship exemptions, including homelessness, filing for bankruptcy, the death of a family member, and eviction or foreclosure.8
How to determine your eligibility
Wondering if you qualify for catastrophic coverage? When you compare plans through a government exchange (HealthCare.gov or a state exchange), catastrophic health insurance will appear in the list of plans available to you if you qualify for this option.
Where can you buy catastrophic health insurance?
Catastrophic plans are only available during the annual open enrollment period or during a special enrollment period if you are eligible for one. You can purchase this coverage through HealthCare.gov or a state-based exchange.
If you are older than 30, you will need to follow the steps necessary to claim an exemption, and you may be required to submit proof when applying for coverage.
Is there catastrophic health insurance for people over 30?
Again, only if you qualify for an exemption. Otherwise, individuals older than 30 do not qualify for catastrophic health insurance and will need to consider an Obamacare plan or other non-ACA health benefits such as short-term medical or hospital plans.
What are affordable alternatives if you don’t qualify?
If you’re not eligible for a catastrophic plan but need an affordable alternative to Obamacare or supplemental coverage to accompany a high-deductible health plan, you have some options.
Keep in mind that the plans listed below can help you pay for medical expenses but are not considered minimum essential coverage.
Alternative health plans
Short-term health insurance provides catastrophic benefits for unexpected illnesses and injuries.
How much is temporary coverage? The best way to find out is to input your information – like age and ZIP code – to get an instant quote.
Hospital (aka, fixed indemnity) plans pay set benefit amounts to help with lower-dollar claims related to hospitalization, surgery, chemotherapy and radiation services, at specific durations such as per day, per week, per month, per visit or per event.
How much are hospital plans? Call the number on your screen to learn about hospital plan rates and options.
Hospital + short-term medical bundles (Fusion) provides more comprehensive benefits when you’re in between Obamacare plans.
How much is Fusion? Input your information and get an instant quote to get plan information, including premium costs.
If you purchase any type of Obamacare plan, whether you qualify for a catastrophic plan or not, there are health plans that can help you manage what your major medical plan requires you to pay out of pocket.
Medical gap plans are a type of supplemental coverage that pays lump-sum, fixed-cash benefits for covered accidents and illnesses. While these plans do not coordinate with your Obamacare plan, they can pair well with it.
How? You can use the benefits to pay your major medical deductible, copay, coinsurance and medical expenses not covered by your Obamacare plan as well as household expenses such as your mortgage, groceries, childcare and transportation costs.
Most supplemental plans at Health eDeals are priced at less than $1/day. Compare your options and get a quote now by entering your ZIP code here.
Summary + Next Steps
You may qualify for a lower cost premium catastrophic health plan if you’re under 30 years old and/or meet the criteria for an Obamacare exemption.
Visit HealthCare.gov or your state’s Obamacare exchange for details, or use Agent Finder to search for local assistance.
If you don’t qualify for a catastrophic plan and are still looking for less comprehensive coverage, then a short-term health plan may be a good fit.
If you’re stuck with a high deductible major medical plan, then a medical gap plan can help defray your out-of-pocket medical expenses.