Under 30? Catastrophic Insurance is an Option

doctor looking at x-rayIf you’re a young adult who doubts that you’ll need health insurance, a “catastrophic” health plan may be for you.  These are plans in which each year you (the insured person) must pay all of your medical costs up to a certain amount – usually several thousand dollars.  But after that, if you have more expense, the insurance company pays the costs for your essential care. 

The big advantages: lower premiums and protection from the truly disastrous costs of a serious health problem.

BONUS: If you buy your catastrophic health plan in the new Health Insurance Marketplace, it will also pay for preventive care, including ordinary vaccinations, screening tests, and regular check-ups. 

Disadvantage: if your income qualifies you for help paying premiums or out of pocket costs, you will not get that help if you buy a catastrophic plan.  Many people with lower incomes will be better off with a regular plan rather than a catastrophic plan, since premiums will be reduced and coverage will be better for the costs of ordinary illnesses or injuries.

If you are under 30, a catastrophic plan will meet your requirement to carry health insurance. People over 30 may be able to purchase a catastrophic plan in the Marketplace if their income is so low that they are exempt from the requirement (hardship exemption). 

Catastrophic health insurance can be a good choice for healthy people who are willing to cover the cost of “ordinary” health care needs, but who want to be protected from the cost of major health problems which could be financially disastrous.


Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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2 thoughts on “Under 30? Catastrophic Insurance is an Option

  1. This is a very interesting type of insurance. I have never heard of it before. It seems like if you were having trouble getting an affordable health plan, this might seem like a reasonable alternative. Hopefully most people are still being offered good health care insurance through their employers.

  2. Unfortunately, employer-based health insurance does NOT meet everyone’s needs — there are some employer plans that offer minimal benefits, and many small employers do not offer health insurance at all. That’s the reason why shopping the new marketplace at http://www.healthcare.gov is going to be so important for many people, especially now that pre-existing conditions can no longer prevent you from getting coverage.

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