This article covers how catastrophic health plans work within the ACA Marketplace, who is eligible to enroll in a catastrophic plan, and the rules governing repayment of excess Advance Payments of the Premium Tax Credit (APTC) beginning in Plan Year 2026.
Key Terms
Key Terms
Catastrophic health plan: A Marketplace plan with low monthly premiums and a very high deductible. Catastrophic plans are designed to protect consumers from extremely high medical costs and qualify as minimum essential coverage (MEC) under the ACA. Consumers cannot apply APTC to a catastrophic plan.
Advance Payments of the Premium Tax Credit (APTC): Federal financial assistance paid directly to a consumer's insurance carrier to reduce their monthly Marketplace premium. APTC is based on projected household income. If a consumer's actual income at tax time differs from their projected income, they may owe back some or all of the APTC they received.
Excess APTC: The amount by which the APTC a consumer received during the coverage year exceeds the Premium Tax Credit (PTC) they are allowed based on their actual household income reported on their tax return.
Exemption Certificate Number (ECN): A number issued by the Marketplace to consumers who have been approved for a hardship or affordability exemption. Consumers over age 30 who want to enroll in a catastrophic plan must include their ECN on their Marketplace application.
Minimum essential coverage (MEC): The minimum level of health coverage required under the ACA. Catastrophic plans qualify as MEC.
What are catastrophic health plans and who can enroll in one?
Catastrophic health plans are Marketplace plans with low monthly premiums and very high deductibles. They are designed to protect consumers from extremely high medical costs and qualify as minimum essential coverage (MEC) under the ACA.
Catastrophic plans cover at least three primary care visits per year and recommended preventive services before the deductible is met. After the out-of-pocket maximum is reached, catastrophic plans cover the same essential health benefits offered by other Marketplace plans.
Consumers cannot apply Advance Payments of the Premium Tax Credit (APTC) to a catastrophic plan. Consumers who qualify for APTC must enroll in a bronze, silver, gold, or platinum plan to use their financial assistance.
To enroll in a catastrophic plan through HealthCare.gov or an approved EDE partner website, a consumer must meet one of the following criteria:
They are under 30 years of age.
They are 30 years of age or older and have qualified for an affordability or hardship exemption.
How does a consumer over 30 enroll in a catastrophic plan using a hardship or affordability exemption?
Consumers age 30 or older who are claiming a hardship or affordability exemption for reasons other than projected annual household income must complete the exemption application form and include their Exemption Certificate Number (ECN) with their Marketplace application. There must be a separate ECN for each person in the household who qualifies for an exemption in order for those household members to enroll in a catastrophic plan.
Are there limits on how much excess APTC a consumer must repay?
The rules governing excess APTC repayment changed significantly beginning in Plan Year 2026.
Plan Year 2026 and later — no repayment cap:
Beginning in Plan Year 2026, there is no cap on the amount of excess APTC a consumer must repay. Per Section 71305 of Public Law 119-21, if the APTC a consumer received during the coverage year exceeds the Premium Tax Credit (PTC) they are allowed based on their actual household income reported on their tax return, the consumer must repay the full excess APTC amount when filing their taxes. There is no limit on this repayment amount regardless of household income.
This is a significant change from prior plan years. Agents and brokers should make clients aware of this rule when discussing APTC amounts, particularly for clients whose actual income may differ from their projected income at the time of enrollment.
Important exception: IRS rules allow a consumer to qualify for the PTC — and therefore avoid owing back their APTC — when their household income reported on their tax return falls below 100% of the FPL, provided both of the following are true:
The consumer was enrolled in Marketplace coverage with APTC based on a projected income of at least 100% of the FPL at the time of enrollment.
The consumer did not intentionally or recklessly misrepresent their household income when they enrolled.
Plan Years before 2026 — repayment caps applied:
For plan years prior to 2026, excess APTC repayment amounts were capped for consumers with household income below 400% of the FPL. The table below shows the repayment caps for Plan Year 2025.
Household Income as % of FPL | Repayment Cap (Single Filer) | Repayment Cap (All Other Filers) |
Less than 200% | $375 | $750 |
200% to less than 300% | $950 | $1,900 |
300% to less than 400% | $1,575 | $3,150 |
400% or above | No cap | No cap |
Note: The 2025 repayment cap figures above should be confirmed against the current IRS table before this article is published.
Additional Resources
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