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Small Business Employee Benefits and HR Blog

FAQ: Can I Buy a Catastrophic Plan?

catastrophic resized 600With the new health insurance marketplaces, all individual health plans will be offered in four standard levels of coverage (aka the "metallic tiers of coverage"). But there's actually a fifth type of plan - catastrophic plans. For some, a catastrophic plan is considered a qualified health plan. This article provides FAQs on catastrophic plans.

What is a Catastrophic Plan?

A catastrophic plan is a health insurance plan characterized by a lower premium and higher deductible. In other words, you will pay less monthly for the plan, but you will pay more at time of medical care. Under a catastrophic plan, you are generally required to pay all of your medical costs up to your deductible, which is usually several thousand dollars.

Although these plans have lower premiums than a comprehensive plan, the plan only covers you if you need a lot of care – such as a hospital stay, surgery, or ER visit.

Catastrophic Plans in the Public Marketplaces

All catastrophic plans being sold through the public health insurance marketplaces will cover three primary care visits and all preventive benefits at no cost. However, if you buy a catastrophic plan through the marketplace, you will not be eligible for premium tax credits. However, the catastrophic plan will be considered a qualified plan (in terms of the individual mandate) if you are younger than 30 years old. In other words, if you buy a qualified catastrophic plan and are under 30 years old, you will not pay the individual mandate penalty for not having health insurance.

Who Qualifies?

In order to be eligible for a catastrophic plan through the health insurance marketplaces, you must fall into one of the following categories:

  • younger than 30 years old
  • have a low income with which all other insurance options are not considered affordable
  • have a hardship exemption (which you can learn about and apply for here

What questions do you have about catastrophic plans and the health insurance marketplaces? Leave a comment below.

 
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