Catastrophic Health Plans are designed to offer those under the age of 30 or those qualified under the hardship exemption, a more inexpensive option for health coverage. Hardship exemption refers to a financial situation that would prevent a person from enrolling in a health plan with greater coverage than a catastrophic plan. The Hardship factor does not abide by the “under 30” rule. The following are reasons for catastrophic plan eligibility under the hardship factor:

• Being evicted
• Homelessness
• Domestic abuse
• Bankruptcy
• Death of a family member
• Natural disaster

While these plans have a lower monthly premium, the deductible is significantly higher. They will cover medical emergency expenses that go beyond the deductible, though they will typically cover 100% of preventative care. 

The caveat to these plans is the high deductible cost. Outside of preventative care, these plans will require you to pay for 100% of your expenses until you meet that deductible. Should you have a medical emergency that requires immediate and expensive care, your catastrophic plan could help alleviate a significant portion of your out-of-pocket costs. 

All catastrophic plans include 3 primary care visits per year at no additional cost. They will also cover preventive services as well as the 10 essential health benefits of qualified health plans (QHPs). These benefits include:

1. Ambulatory patient services
2. Emergency care
3. Hospitalizations including surgeries and overnight stays
4. Pregnancy along with newborn care
5. Substance abuse and mental health treatment
6. Prescription costs
7. Rehabilitation services for injuries both mental and physical
8. Lab work
9. Preventative services
10. Pediatric services including oral and vision

For the 2022 plan year, catastrophic health plans will have an individual annual deductible of $8,700. After this deductible is met, all essential health benefit services will be covered at 100% for the rest of the year, provided the services are from in-network providers. Catastrophic plans typically have a lower monthly premium. To determine the cost of the premium, the plan will take into account your age, income, location, tobacco use, and other demographic information. 

With catastrophic plans, you are unable to utilize the premium tax credit or other subsidies to offset the cost of the plan. This may be something for you to consider looking into with the American Rescue Plan recently making tax credit subsidies larger and more accessible. If you have access to subsidies it may be a more prudent option to go with a non-catastrophic plan. 

Related Terms: Health Insurance