What Is Catastrophic Health Insurance?

Doctor and nurses pushing a patient through the ER on a stretcher and holding an oxygen mask on their face

 kupicoo / Getty Images


Catastrophic health insurance is an inexpensive coverage option designed to protect you from major medical expenses.

Catastrophic health insurance is an inexpensive coverage option designed to protect you from major medical expenses. In exchange for a low premium, you'll have a high deductible. As a result, you'll pay most of your medical costs out of pocket until you reach it.

If you can’t afford to buy health insurance through your employer or from the Health Insurance Exchange, you still have options. You may be able to buy a basic health plan covering essential health benefits for unexpected illnesses or accidents. Learn how these plans work and what the actual costs may be before you buy.

Definition and Example of Catastrophic Health Insurance

These plans are designed to protect you from excessive out-of-pocket costs for catastrophic health events. They are still required to meet the minimum essential benefits under the Affordable Care Act (ACA), but you will generally incur high out-of-pocket costs before reaching your (very high) deductible.

Unlike some standard plans, catastrophic plans pay very few health expenses before reaching your deductible. That means they won't be much help regarding copays, prescription costs, or other fees you're responsible for.

Of course, one major accident could get you to your deductible quickly, and then you would be protected, but you'd spend a lot of money before you get to that point. However, your low premiums will offset some of those costs.


Under the ACA, the deductible for all individual catastrophic insurance plans in 2022 is $8,700 for an individual and $17,400 for a family. That would be the most you'd pay out of pocket in one year.

Catastrophic plans are only available for a few groups: people under age 30; those who qualify under a hardship exemption; or those who cannot afford employer or marketplace insurance options.

How Does Catastrophic Health Insurance Work

Like all insurance plans offered under the ACA, catastrophic plans must cover certain preventive services at no cost to you, whether you have met your deductible or not. They generally include basic shots, immunizations, and screenings. A full list is available at HealthCare.gov.

Major medical plans must also cover at least three visits to your primary care doctor before you meet your deductible.

Other than those benefits, you'll pay your medical expenses out of pocket until you meet your deductible. After that point, catastrophic insurance must cover the same essential health benefits as other health marketplace plans, including:

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Pregnancy and maternity/newborn care
  • Mental health/substance abuse
  • Prescription drugs
  • Rehabilitative services
  • Laboratory services
  • Preventive/wellness services
  • Pediatric services
  • Additional benefits, such as birth control or breastfeeding coverage
  • Dental or vision coverage (based on your state’s requirements for minimum coverage)

Once you've reached your deductible, you'll have no coinsurance or copay on any of these services.


The availability and cost of catastrophic health insurance plans vary by provider and state.

How Do HSAs Fit In?

If you are employed and covered by only a high-deductible health plan, you can combine a catastrophic health care plan with a health savings account (HSA), which allows you to set aside tax-free money to apply toward medical costs. An HSA can help you pay for any of your out-of-pocket health expenses under a catastrophic health insurance plan.

How to Get Catastrophic Health Insurance

Many insurance providers offer catastrophic health care insurance. If you already have insurance, check with your provider to see its available plans and how much they cost. If you don't want to use your provider, you can shop on the federal government's healthcare marketplace or that of your state.

Before you purchase a catastrophic plan, keep in mind that your deductible and out-of-pocket expenses will likely be higher than if you had a traditional plan.


No ACA subsidy payments are available to apply toward the premium for catastrophic health insurance plans. If you qualify for a subsidy, a bronze- or silver-level traditional plan may cost less and cover more than a catastrophic plan.

Whether you choose a catastrophic plan or something more, make sure you can afford it if you have to pay up to your maximum out-of-pocket amount. Like other health plans, you can only purchase catastrophic insurance during an open enrollment period or after a qualifying event.

If you’d like more information about catastrophic health plans, visit HealthCare.gov, or call 800-318-2596.

Key Takeaways

  • Catastrophic health insurance is a low-cost health care plan; it covers very few medical expenses until you reach a high deductible.
  • These plans are only available to people under age 30 or those who qualify for a hardship or affordability exemption.
  • After you reach your high deductible, a catastrophic plan covers all of the essential benefits of a traditional health plan.
  • Catastrophic plans do not qualify for government tax breaks or subsidies.

Article Sources