Trump Admin Opens Door to High-Deductible Catastrophic Health Plans—Here’s Who Should (and Shouldn’t) Apply

The Centers for Medicare & Medicaid Services (CMS) released guidance on Thursday that expands access to catastrophic health insurance.

Catastrophic health insurance is low-premium, high-deductible coverage that primarily protects plan holders from incurring sky-high medical bills during serious illnesses or injuries.  

Previously, you could only buy this plan type through the ACA exchanges if you were under 30 or had a hardship exemption. The new guidance makes it easier for people who are newly ineligible for advanced premium tax credits and cost-sharing reductions (CSRs) to apply for and receive the exemption. 

Namely, beginning on Nov. 1, 2025—the start of the 2026 open enrollment season—CMS will expand access to people who earn over 250% of the federal poverty level (FPL) and only ineligible for CSRs, as opposed to both ACA subsidies. 

CMS is also introducing an online application process that automatically evaluates hardship eligibility based on your projected annual household income data, and an expedited review process for hardship applicants using the existing paper application.

Why the Trump Administration Is Expanding Catastrophic Plan Access

CMS did not respond immediately to a request for further details on the new guidance. In its fact sheet, the agency linked the changes to rising health insurance premiums, warning that without broader access to catastrophic plans, marketplace shoppers without subsidies could be priced out of coverage.

Earlier this month, a KFF-Peterson analysis of proposed insurer rates found ACA Marketplace insurers are raising premiums by about 20% in 2026. The hikes are the result of several factors, including rising health care costs and the looming expiration of enhanced premium tax credits.   

These credits, introduced by the American Rescue Plan and extended by the Inflation Reduction Act, increased the subsidy amount and expanded eligibility to households with higher incomes. They’ll expire at the end of this year unless Congress takes action.   

CMS’s latest guidance follows other recent Trump administration-led changes to address this year’s expectedly high health insurance prices.

Most notably, the recently passed “One Big Beautiful Bill,” which introduced stringent ACA and Medicaid enrollment requirements, made catastrophic health plan holders eligible for health savings accounts (HSAs). These tax-deferred savings vehicles, which have long been subject to strict IRS eligibility rules, allow eligible health care plan holders to set aside money for medical expenses.

Should You Consider a Catastrophic Health Care Plan?

Catastrophic health care plans ostensibly offer the lowest premiums among the ACA health plan categories, but they also have the highest deductibles and out-of-pocket maximums—meaning you could pay thousands of dollars for medical care before your coverage begins.  

They also come with limitations. For instance, catastrophic health insurance covers only three primary care visits until you meet your deductible. 

Still, these plans can be an affordable option for young or healthy applicants who don’t anticipate needing frequent medical care. And they’re better than going without insurance at all, given that they cover the ACA’s 10 essential health benefits, including emergency services, hospitalization, and preventative care.  

The following steps can help you determine if catastrophic health insurance is your best bet this open enrollment season:

• Know and compare your options. Catastrophic plans aren’t eligible for subsidies, so if you qualify for premium tax credits or CSRs, a Bronze or Silver ACA plan could provide more comprehensive yet affordable coverage. 
• Assess your health care needs. These plans are often inadequate for people who require frequent care, take regular medications, or need pricey medical procedures in the short term. 
• Read the fine print to ensure you fully understand a catastrophic plan’s scope and limitations. 
• Consider an HSA so you can more readily afford unexpected out-of-pocket medical expenses. In 2026, eligible plan holders can make HSA contributions up to $4,400 for self-only coverage and $8,750 for family coverage.