1. Health benefit insurance policy that offers minimal coverage for medical expenses under a specific level such as $10,000 a year but gives coverage for severe and prolonged chronic illness or injury that may cause the patient difficult financial hardship. Generally there is no maximum amount of coverage for this type of plan, but there may be some coinsurance. 2. Under a Medicare Part D plan, the name for the step in which the plan pays nearly all of the patient’s drug expenses until the end of the year, with no upper limit. The patient pays only a small share of the drug expenses (approximately 5%). Also called catastrophic insurance, catastrophic health insurance, catastrophic plan, or major medical.