Covered California Certified Enroller Practice Exam

What is a catastrophic plan also known as?

1. Minimum coverage plan

2. Comprehensive plan

3. Emergency plan

4. High-deductible plan

The correct answer is: Minimum coverage plan

A catastrophic plan is also known as a high-deductible plan. This type of health insurance plan is designed primarily for young adults and individuals who want to protect themselves against very high costs in the event of a serious medical issue. What characterizes a catastrophic plan is its low monthly premiums paired with a high deductible, meaning that individuals will pay a significant amount out-of-pocket for their medical expenses before their insurance coverage kicks in. This helps to keep costs down for those who do not expect to require frequent medical care but still want to have a safety net for unexpected health emergencies. While terms like "minimum coverage," "comprehensive plan," and "emergency plan" may imply different levels of benefits or coverage structures, they do not accurately represent the specific characteristics of a catastrophic plan. A comprehensive plan typically offers a broader range of coverage with lower deductibles and out-of-pocket costs, which differs greatly from the high-deductible aspect of a catastrophic plan. Likewise, "minimum coverage" generally refers to plans that meet only basic legal standards, and "emergency plan" may focus on urgent situations without the broader scope of healthcare needs. Thus, understanding the definition and purpose of a high-deductible plan underscores the correct identification of what a catastrophic plan