What is a catastrophic health insurance plan?

A catastrophic health insurance plan is characterized by a low-premium structure combined with a high deductible. This means that policyholders pay lower monthly premiums but are responsible for a significant amount of out-of-pocket costs before their insurance begins to cover essential health benefits. The purpose of such plans is to protect individuals against high medical expenses that can arise from serious health issues or accidents while keeping regular healthcare costs manageable.

These plans are particularly suitable for young, healthy individuals who may not expect to use medical services frequently but still want insurance coverage for unexpected, high-cost medical incidents. Once the high deductible is met, catastrophic plans typically cover essential health benefits, ensuring that individuals have access to necessary medical care without incurring overwhelming financial burdens.

In contrast, high-premium plans with low deductibles provide more comprehensive coverage right from the start but at a higher monthly cost. Comprehensive plans cover a wide array of medical expenses without the limitations seen in catastrophic plans. Preventive services-only plans focus solely on preventive care and do not offer coverage for other medical needs, which is outside the scope of catastrophic insurance.