What Is Catastrophic Health Insurance?
In this article, we’ll explore catastrophic health insurance, who qualifies for it, and how to apply. We will also discuss the costs and benefits of this insurance for college students.
We’ll even include some of the challenges you might face and tips on navigating catastrophic health insurance options. By the end, you’ll clearly understand how this type of insurance works and whether it’s the right option for you.
Getting sick can be costly, whether you’re a college freshman facing your first doctor’s bill or an adult learner dealing with medical expenses. As a student, you’re likely trying to stay healthy without breaking the bank on healthcare.
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That’s where health insurance comes in.
Health insurance is designed to protect you from high, unexpected medical costs. But choosing a plan can feel overwhelming—pricey premiums, confusing fine print, and all the legal jargon make it hard to know what’s actually covered.
Catastrophic health insurance is one of the best college student health insurance options for those who are mostly healthy. These plans are perfect if you:
- Are not over 30 years old or qualify for a hardship exemption.
- Don’t expect extensive medical care but want protection in case of a serious accident or illness.
- Want low monthly premiums.
One thing you need to keep in mind, however, is that these plans are not designed to cover everything. Yet, they do provide essential benefits for when you really need them.
Here’s a quick rundown of what’s typically included:
Preventive Care
Catastrophic health insurance covers preventive services before you reach your deductible. This might include things like vaccinations, cancer screenings, and wellness visits.
Emergency Services
Suppose you’re in an accident or face a major health crisis, like a heart attack or serious injury. In that case, catastrophic plans can help cover the cost of emergency room visits, emergency transportation, and other related services. This is the main reason people choose catastrophic insurance. It’s made for high-cost, unexpected situations.
Hospitalization
If you need to be admitted to the hospital or undergo surgery, catastrophic health insurance will help cover a portion of the costs. But remember, you’ll likely have to meet your deductible first.
Specialized Services
While catastrophic plans cover some specialized care related to emergencies, like surgery or intensive care, they typically don’t cover routine visits to specialists or regular treatments for chronic conditions.
You may ask, “Is catastrophic health insurance better than other standard but affordable health insurance for students?” The answer depends on several factors.
Catastrophic plans cover the same essential health benefits as other Marketplace plans, including free preventive services and three primary care visits per year before your deductible. However, you’ll pay out-of-pocket for most care until you meet your deductible, which was $9,100 for individual coverage in 2024.
Depending on whether you qualify for subsidies on the Marketplace and how often you need healthcare, a Bronze or Silver Marketplace plan might offer better value for you.
- Bronze Plans cover 60% of costs, leaving you to pay 40%. They have the lowest monthly premiums but the highest out-of-pocket costs and deductibles, making them best for those seeking affordable coverage but who don’t expect major medical needs.
- Silver Plans cover 70% of costs, with moderate premiums and lower deductibles than Bronze plans. If you qualify for cost-sharing reductions, Silver plans can save you thousands. They’re a good option if you expect to need significant care and are eligible for extra savings.
Who Is Eligible for Catastrophic Health Insurance?
Understanding who qualifies for catastrophic health insurance is key to knowing if it’s the right option for you. The eligibility requirements are specific, and you’ll need to meet certain conditions to qualify.
Here are the catastrophic health insurance eligibility criteria:
Age Restrictions
The first thing to know is that catastrophic health insurance is typically available only to individuals under 30 years old. This age restriction exists because catastrophic plans are intended for generally healthy, younger individuals. This age group is unlikely to require frequent medical care but wants to protect themselves against major medical costs.
Financial Hardship Exceptions for Those Over 30
If you’re over 30 years old, you might be out of luck when it comes to qualifying for a catastrophic plan. However, there is a financial hardship health insurance exception that could make you eligible for a catastrophic plan even if you’re older than 30.
Examples of qualifying financial hardships include:
- High Student Debt. Many students leave college with significant student loan debt. If you’re having trouble managing your student loan payments and your low income, you might meet the financial hardship criteria to qualify for a catastrophic plan.
- Income Limits. If your income falls below a certain level (often determined by the federal poverty level), you may be able to qualify for a catastrophic plan. This is especially common for students working part-time or relying on financial aid and family support. Here are some general points about how FPL works:
- For an individual (a single student, for example), the FPL might range between $13,000 and $15,000 per year, depending on the state.
- For a family of four, the FPL might be around $30,000–$40,000 per year, again depending on where you live.
- Unemployment. If you’re between jobs or in a situation where your income is insufficient to cover basic living expenses, you may be eligible for a catastrophic plan under the financial hardship exception.
In 2024, the FPL for a single person in the contiguous 48 states is about $14,580 annually. However, the FPL is higher in Alaska and Hawaii due to the increased cost of living. Your specific eligibility for catastrophic coverage will depend on where you live and your household size.
How to Apply for a Catastrophic Plan Through the Marketplace
Now, let’s take a closer look at the catastrophic plan enrollment process:
Step 1: Check your eligibility.
The first step is to confirm that you’re eligible for catastrophic health insurance. If you’re under 30, you’re automatically eligible. If you’re over 30, you’ll need to determine if you qualify based on financial hardship. You can check with the Health Insurance Marketplace or speak to an insurance navigator to help determine your eligibility.
Step 2: Visit the health insurance marketplace.
In the U.S., the Health Insurance Marketplace (Healthcare.gov) is the primary place where you can apply for health insurance, including catastrophic plans. You can visit the website to start your application. If you live in a state with its marketplace, you’ll need to use that platform instead.
Step 3: Fill out your application.
The application will ask for information about your income, household size, and current health coverage (if any). You’ll also need to provide documentation to support any claims for financial hardship if you’re over 30. The system will use this information to determine which plans you qualify for.
Step 4: Review available plans.
Once your application is submitted, you’ll be shown a list of available health insurance plans, including catastrophic plans. You can compare the plans based on their premiums, deductibles, and coverage options.
Step 5: Enroll in Your Chosen Plan.
After reviewing your options, you can select which low-cost health insurance for young adults that works best for you. Once you’ve chosen your plan, follow the prompts to complete the enrollment process.
Important Note: You can only apply for a catastrophic plan during the Open Enrollment Period unless you qualify for a Special Enrollment Period. Open Enrollment usually happens in the fall and allows anyone to apply or switch plans. If you miss it, you may still apply if you experience a qualifying life event, like moving, getting married, having a baby, or losing coverage.
Costs and Benefits of Catastrophic Health Insurance for Students
Catastrophic health insurance offers a budget-friendly way to stay covered. Yet, it’s still important to understand how its costs and benefits work.
Benefits of Catastrophic Health Insurance
- Affordability: Catastrophic plans have low monthly premiums, making them ideal for students on a tight budget. Compared to more comprehensive plans, you’ll pay less each month.
- Coverage for Major Events: While these plans don’t cover everything, they are great for protecting you from high costs in an emergency or major health issue. They cover:
- Preventive Care: Essential services like vaccinations and screenings are free, even before you reach your deductible.
- Emergency Services: ER visits, ambulance services, and other critical emergencies are covered.
- Hospitalization: Major medical issues that require a hospital stay are included.
- Specialized Care: Some specialized services are covered if they’re linked to an emergency or major health issue.
Costs to Consider
While the benefits are appealing, there are some costs to keep in mind:
- High Deductibles: Catastrophic health coverage for college students comes with high deductibles. This means you’ll need to pay a significant amount out-of-pocket before your insurance kicks in. These deductibles can range into the thousands.
- Out-of-Pocket Costs: After meeting your deductible, marketplace catastrophic plans will still require you to pay a portion of your medical costs until you hit your annual out-of-pocket maximum.
Common Challenges and How to Overcome Them
Catastrophic health insurance options for students also come with many challenges.
Meeting and Proving Eligibility Criteria
The #1 challenge is meeting eligibility requirements. This is especially true for students older than 30 or not meeting hardship criteria.
Solutions:
- Explore options like enrolling in a parent’s insurance plan if under 26.
- Check for Medicaid expansion or state-specific programs that may provide coverage.
- Consult an insurance navigator to identify the best options.
Another challenge is proving financial hardship. To show that you need help, follow these two easy steps:
- Collect your financial aid award letters, tax returns (or proof of income), and any statements showing your income below the federal poverty line.
- Talk to your school’s financial aid office. They can help you with the documentation needed to prove financial hardship.
Paying High Deductibles and Limited Coverage
Catastrophic plans have high deductibles and only cover essential health benefits after those deductibles are met. This can be a financial burden if major health issues arise.
Solutions:
- Use Preventive Care: Catastrophic plans usually cover preventive care at no cost, so take advantage of annual checkups, vaccinations, and screenings.
- Consider Supplementing with Other Coverage: If you anticipate needing more health care services, you might want to consider a more comprehensive or supplemental plan offering lower deductibles or covering more types of care.
- Look for Other Low-Cost Health Options: Campus health centers can provide basic care at low cost or free, which can reduce the need for emergency services covered by your catastrophic plan.
Limited Access to Care and Providers
Some catastrophic plans have limited provider networks. This can restrict access to certain doctors or specialists, especially for students who may need care outside their campus area.
Solution:
- Check the Network: Review the network of doctors and facilities that accept the plan. If you’re attending school far from home, ensure that there are providers near your campus.
- Use Telehealth: Many plans offer telehealth services, which can expand your access to healthcare providers without needing to visit in person.
Navigating health insurance options can be overwhelming, and you may need additional help. Here are a few tips on navigating health insurance options for college students:
- Campus Health Centers: Many universities offer affordable health services, can guide you on insurance options, and provide care if you need it.
- Community Health Organizations: Some local non-profits or government agencies assist with applying for health insurance, including catastrophic plans.
- Insurance Navigators and Brokers: Certified insurance navigators or brokers can help you understand all your options, including catastrophic insurance, and help with the application process at no cost.