Final answer:
Catastrophic plans are high-deductible health insurance plans for people under 30 or with a hardship exemption, covering serious health events and essential benefits. They do not cover all medical costs from the beginning, as patients pay out of pocket until the deductible is met.
Step-by-step explanation:
A catastrophic plan is a type of health insurance designed for individuals under 30 or those who qualify through a hardship exemption. These plans provide essential health benefits but have high deductibles, meaning that they are designed to protect you in worst-case scenarios, such as serious accidents or illnesses. To qualify, individuals must be under 30 or have received a hardship exemption. A catastrophic plan generally covers three primary care visits per year at no cost, and preventive services without copayment, while patients must pay all other medical costs out of pocket until meeting the high deductible. However, after meeting the deductible, the plan will cover costs as specified but does not typically provide a comprehensive range of benefits like a standard health insurance policy.
While these plans do cover essential health benefits, they do not cover everything. For instance, they may not cover costs such as prescriptions or specialist visits before the deductible is met. One must verify what is specifically covered by their catastrophic plan, as coverage can vary. The intent behind catastrophic plans is to ensure that in the event of a significant health issue, the financial burden will not be completely overwhelming. It is a form of financial protection against asymmetric risk, similar to having a Plan B for managing potential devastating threats.