Catastrophic coverage is insurance coverage that is designed to protect the consumer from financial disaster in the case of a serious medical emergency. Because this type of coverage focuses primarily on the most expensive medical care, smaller expenses such as doctor visits or prescription drugs are usually not covered in catastrophic plans. Instead, these plans typically have high deductibles which must be met before the plan begins paying claims. Once the patient's out-of-pocket spending reaches a specified maximum amount, the plan covers all expenses beyond that amount.
An example of a catastrophic health plan is the high deductible health plan associated with HSAs. These plans offer no coverage at all until the deductible is met, limited coverage until the annual out-of-pocket maximum is met, and then 100% coverage for all expenses beyond that amount.
