What does it mean when a plan is described as a “catastrophic plan”?

A "catastrophic plan" refers specifically to a type of health insurance designed primarily for young adults, characterized by lower monthly premiums and higher deductibles. These plans are intended to provide a safety net for unexpected and high-cost medical situations, such as serious accidents or illnesses. Thus, they are appealing to younger individuals who typically have fewer health care needs and prefer lower upfront costs.

In essence, while catastrophic plans can cover essential health benefits, they are structured to minimize routine healthcare expenses and instead prepare policyholders for significant and unforeseen medical challenges. This design allows young adults to maintain health insurance coverage while ensuring affordability. Coverage under these plans does meet the requirements of the Affordable Care Act, but the higher deductible means that individuals are responsible for a larger share of their initial health care costs before the insurance kicks in.

Other options do not accurately capture the unique features of catastrophic plans. For example, plans that only cover basic health services or are limited to emergencies do not reflect the broader coverage intended by catastrophic plans. Additionally, comprehensive coverage for all health needs is not aligned with the essence of a catastrophic plan, which focuses on protecting against significant risks rather than covering all health expenses seamlessly.