How does a catastrophic health plan typically operate?

A catastrophic health plan operates by having a structure that features low premium costs but comes with high deductibles and limited benefits. This design is specifically created to protect individuals against very high costs that can occur in catastrophic situations, such as serious illnesses or accidents.

Under this plan type, the insured pays for most routine and preventive care out of pocket until they reach their high deductible. After meeting the deductible, the plan may cover a percentage of the costs for hospitalizations and other serious health needs. The primary aim of a catastrophic plan is to provide a safety net for substantial unexpected medical expenses while maintaining lower monthly costs for individuals who are generally healthy and do not anticipate needing extensive medical care.

This approach makes it accessible for people, especially younger individuals or those who may not expect to use substantial health services but want to be protected against financial risk in serious health scenarios. Other options presented do not accurately reflect the core structure and intent of catastrophic plans.