CMS Proposes Expansion of Catastrophic Health Plans for 2026

The Centers for Medicare & Medicaid Services (CMS) has proposed significant changes to Affordable Care Act (ACA) marketplace regulations for 2026, with a key focus on expanding access to catastrophic health plans. These proposed rules, announced on February 10, 2026, also include adjustments to standardized plan options, income verification procedures, and auditing processes for insurers.

Expanding Access to Catastrophic Plans

Currently, catastrophic health plans are primarily available to individuals under the age of 30 or those who qualify for a hardship exemption. The proposed rule aims to broaden eligibility by allowing individuals age 30 and older who are ineligible for premium tax credits or cost-sharing reductions to qualify for a hardship exemption, thereby gaining access to these plans. CMS states this is in response to anticipated premium increases for the 2026 plan year.

Catastrophic plans feature low monthly premiums but come with very high deductibles. For 2026, these deductibles are set at $10,600 for individuals and $21,200 for families before insurance coverage begins, with limited initial coverage for three primary care visits and certain preventive services.

Insurers may also be permitted to offer catastrophic plans with multi-year terms, potentially extending coverage for up to 10 years.

Changes to Plan Design and Requirements

The proposed regulations also include a repeal of standardized plan options and related limit requirements, giving insurers more flexibility in plan design. CMS is considering allowing low-deductible plans with higher maximum out-of-pocket limits.

Strengthened Income Verification

To address concerns about accuracy and fraud, the rule reintroduces a requirement for consumers to submit documentation to verify their income when data sources indicate household income is below 100 percent of the federal poverty level. The requirement for exchanges to accept a household’s income attestation when the IRS provides no data for that household will also be removed.

Increased Oversight and Auditing

CMS is clarifying its rules regarding the auditing and compliance review of health plans offered through the exchange, ensuring greater oversight of participating insurers.

Industry Response and Next Steps

Dr. Mehmet Oz, CMS administrator, stated that the proposed rule “lowers premiums, expands consumer choice, cracks down on fraud, and promotes innovative coverage that prioritizes prevention and long-term health.”

The agency is currently accepting public comments on these proposed changes through March 13, 2026.

How to Shop for Catastrophic Plans

Individuals under 30 can shop for catastrophic plans on the federal exchange or state-based marketplaces like Pennie. Pennie can be reached at 844-844-8040 for assistance.