catastrophic plan

What is a catastrophic health insurance plan?

Although the term “catastrophic plan” has long been used as a generic catch-all phrase to describe health insurance plans with high deductibles and little coverage for routine care, the Affordable Care Act assigned strict parameters to the term:

Catastrophic plans are only available to certain applicants (as detailed below, eligibility for these plans is being expanded for 2026), have deductibles equal to the maximum annual out-of-pocket limit, and must provide pay at least part of the cost of up to three primary care visits before the deductible is met. (The specific requirements for Catastrophic plans available in the text of the ACA, section 1303(e)).¹ In addition, an enrollee in a catastrophic plan is not eligible to have premium subsidies paid on their behalf.

And for the purposes of the ACA's risk adjustment program, catastrophic plans are in a separate risk pool from the metal-level plans,² although they're in the same general shared risk pool.³ (The risk adjustment program transfers funds from carriers that insure healthier enrollees to carriers that insurer sicker enrollees. This helps to stabilizes the overall market, and removes the incentive for carriers to design plans that appeal more to healthy enrollees.)⁴

This means that within a state, catastrophic plans transfer risk adjustment funds with other catastrophic plans, but not with metal-level plans. This is one of the reasons catastrophic plans often have lower prices than Bronze plans. (The coverage they offer is quite similar to Bronze plans: Bronze plans cover an average of 56% - 62% of costs for a standard population,⁵ while catastrophic plans must cover less than 60% of average costs,⁶ with the same maximum out-of-pocket limit that applies to other plans, but catastrophic plans generally have lower premiums.⁷

Their enrollees are mostly fairly affluent – since subsidies cannot be used with Catastrophic plans, the enrollees tend to be those who earn too much to qualify for subsidies – and under the age of 30, and the plans don't have to share risk with metal-level plans that tend to have a less healthy pool of enrollees.

Can I use premium subsidies to buy a catastrophic plan?

No. An enrollee in a catastrophic plan is not eligible for premium subsidies.⁹ (and cost-sharing subsidies are also not available for Catastrophic plans, since those can only be obtained if you choose a Silver plan).

Depending on your income, you may be eligible for a premium subsidy that you could apply towards a metal-rated plan, however. This may make a metal-level plan more affordable than a catastrophic plan.¹⁰

The American Rescue Plan and Inflation Reduction Act have made premium subsidies larger and more widely available through the end of 2025. This is important to keep in mind if you've opted for a catastrophic plan in the past because you weren't subsidy-eligible. You may find that you are now eligible for subsidies to reduce the cost of your metal-level plan. But without Congressional action, the subsidy enhancements will expire at the end of 2025, and the ACA's original subsidy rules will once again be in place as of 2026.

Who can enroll in a catastrophic plan?

Catastrophic plans are only available to people under age 30, or people 30 and older who qualify for a hardship/affordability exemption¹¹ (which means that due to unaffordability of coverage, economic hardship, or certain other hardships – such as the death of a family member – the person is not required to maintain health insurance coverage*).

For the 2026 plan year, CMS has made changes to allow more people to qualify for a hardship exemption and thus be eligible to enroll in a catastrophic plan.¹² Starting on November 1, 2025, when open enrollment begins for 2026 coverage, consumers whose projected household income makes them ineligible for premium tax credits will be eligible for a hardship exemption and thus allowed to enroll in catastrophic coverage. (Assuming the federal subsidy enhancements are allowed to expire at the end of 2025, this will include anyone with a household income above 400% of the federal poverty level.) As discussed below, catastrophic plans are not available in all areas, so access will also depend on where a person lives.

The new hardship exemption provision will also apply to people whose household income is above 250% of FPL (and thus ineligible for cost-sharing reductions). But if these individuals select a catastrophic plan, they will be forfeiting their premium tax credits, as premium tax credits cannot be used with catastrophic plans. So people with household income between 250% and 400% of the poverty level who seek a hardship exemption will need to compare the full-price cost of a catastrophic plan (if any are available in their area) with the subsidized cost of metal-level plans, and determine what plan will best fit their needs and budget.

CMS is rolling out a new online application process for the hardship exemption (as opposed to just the existing paper application process), but the agency has noted that it will initially only be available to those who aren’t eligible for premium tax credits, and will later be expanded to include those who are only ineligible for cost-sharing reductions.¹³

Until that happens, the existing paper application process for a hardship exemption will need to be used for those who are applying based on ineligibility for cost-sharing reductions. But CMS has noted that they are working toward a “goal of streamlining hardship exemption paper application processing and reducing the administrative burden on consumers,” making it easier for people to obtain an exemption.¹⁴

The new hardship exemption rules will apply in almost all states. This includes all states that use the federally-run HealthCare.gov exchange platform, as well as all states that run their own exchange platforms except California, Connecticut, Maryland, and the District of Columbia (those four states have their own hardship exemption processes, whereas the rest of the state-run exchanges use HealthCare.gov’s exemption process).¹⁵

The first Trump administration previously expanded access to hardship exemptions in April 2018,¹⁶ allowing exemptions for people in areas where all plans cover abortions, areas where only one insurer (or zero insurers) offers plans in the exchange, or where a personal hardship is created due to the plan options available in the exchange.

In particular, the provision for people in areas where just one insurer offers plans in the exchange made a hardship exemption available to far more people, allowing them to potentially purchase a catastrophic plan (albeit without premium subsidies, making this a realistic alternative only for people who aren't otherwise eligible for subsidies). But insurer participation in the exchanges has increased significantly since 2018, with very few enrollees currently having access to just one insurer's plans.¹⁷

Can I contribute to an HSA if I have a catastrophic plan?

Starting in 2026, you will be able to contribute to a health savings account (HSA) if you have a catastrophic plan purchased through the health insurance Marketplace. This is due to Section 71307 of the One Big Beautiful Bill Act (OBBBA) that was enacted in July 2025.¹⁸ But before 2026, enrollment in a catastrophic plan will not allow a person to contribute to an HSA.

How many people enroll in catastrophic plans?

During the open enrollment period for 2025 coverage, only 54,109 people enrolled in catastrophic plans, out of more than 24 million exchange enrollees nationwide.¹⁹ (People can enroll in catastrophic plans outside the exchange, but off-exchange enrollment is quite low across all types of plans, and the same eligibility rules apply to catastrophic plans on-exchange or off-exchange.)

Why is catastrophic plan enrollment so low?

Catastrophic plans only show up as an option in Marketplace plan finder tools for applicants who are under 30. And  premium subsidies can't be used with catastrophic plans. More than nine out of ten Marketplace enrollees qualified for advance premium tax credits in 2025,²⁰ and those would be forfeited for anyone who opted for a Catastrophic plan. The American Rescue Plan's subsidy enhancements, which will continue to be available through at least the end of 2025, make catastrophic plans even less popular than they were before 2021, since more people are eligible for subsidies.

Obtaining a hardship exemption is not typically a quick process, as it requires the applicant to submit an exemption application and wait to see if it’s approved. If it is, the person will be given an Exemption Certificate Number (ECN) that can be used to apply for a Catastrophic plan.²¹ As noted above, however, a new online application process for hardship exemptions is being debuted in November 2025 on HealthCare.gov, allowing people who are ineligible for premium tax credits to obtain a hardship exemption in a more streamlined fashion.

For the time being, catastrophic plans don't automatically show up on the Marketplace’s list of available plan options for people who are 30 or older. Also, applicants may be unaware that they could seek a hardship (including affordability) exemption and obtain a catastrophic plan. A knowledgeable broker can inform applicants about catastrophic plans and, if one is available and will meet the applicant’s needs, guide them through the process of obtaining an exemption. But the process isn't necessarily easy or seamless even with assistance.

For most people, this concern is not applicable through at least 2025, thanks to the American Rescue Plan's enhancement of premium subsidies (extended through 2025 by the Inflation Reduction Act). Under that law, households are not expected to pay more than 8.5% of their income for the second-lowest-cost Silver plan, regardless of how high the household's income is. Their subsidy amount is based on the cost of the second-lowest-cost Silver plan, but that subsidy can then be applied to a lower-cost Bronze plan if they choose. This means the after-subsidy cost of the lowest-cost plan – which is generally quite a bit cheaper than the second-lowest-cost Silver plan – is unlikely to be more than 7.28% of their modified adjusted gross income (MAGI), which is the threshold for an affordability exemption in 2025.²² (For 2026, this threshold will increase to 8.05% of MAGI,²³ although as noted above, hardship exemptions will also be available to people who aren’t eligible for premium tax credits or cost-sharing reductions.)

Other reasons for low catastrophic plan enrollment

In addition to the limited eligibility, cumbersome exemption process, and the lack of catastrophic plans displayed as an option for people 30+ who might be eligible for an affordability exemption, there are other reasons for low catastrophic plan enrollment, including:

• Catastrophic plans aren't always the lowest-cost option for people who don't get premium subsidies. For example, in Cook County, Illinois, the lowest-cost plan for a 27-year-old in 2025 is $267/month (a Bronze plan), while the lowest-cost catastrophic plan for this person is $290/month.²⁴
• In some areas, there are no catastrophic plans available. For example, Wyoming has no catastrophic plans available in 2025.²⁵ And in some areas, the lowest-cost insurer doesn't offer catastrophic plans, so even if other insurers do, the Bronze plan from the lowest-cost insurer might be less expensive than another insurer's catastrophic plan.
• Some applicants are specifically looking for HSA-qualified plans so that they can contribute money to an HSA. Through the end of 2025, catastrophic plans cannot be HSA-qualified high-deductible health plans – despite their high deductibles – because they pay for some non-preventive services before the deductible and because their out-of-pocket maximum is too high. So a person who wants to be able to contribute to an HSA cannot enroll in a catastrophic plan. But as noted above, this will change in 2026, when a Marketplace catastrophic plan will make a person eligible to contribute to an HSA¹⁸
  

Where can I buy a catastrophic plan?

Catastrophic plans are available both in and out of the ACA's health insurance exchanges, but hardship (including affordability) exemptions for those 30 and older must be obtained from the exchange.

The Trump administration issued guidance in 2018 that allows people to claim hardship exemptions on their tax returns instead of having to obtain them from the exchange in their state. But that was only useful in terms of avoiding the ACA's individual mandate penalty (which still applied for 2018 but is no longer applicable). Exemptions via a tax return are granted after the year is over. An applicant who wants to apply for a catastrophic plan must get their hardship exemption in advance to be able to apply for the catastrophic plan during open enrollment or a special enrollment period.

If you're shopping for health insurance in your state's exchange, you'll see catastrophic plans (assuming they're available in your area) in addition to the Bronze, Silver, and Gold plans (and in some areas, Platinum plans) when you browse the available options, but only if you're under 30 years old. If you're 30 or older, it won't show up as an option unless you have your exemption certificate from the exchange.