A New Option Is Available Under the ACA for Consumers With Cancelled Health Insurance Policies

On December 19, 2013 the White House announced a broadened Affordable Care Act (“ACA”) hardship exemption for individuals whose health insurance plans have been cancelled and are having a difficult time locating plans that are affordable on the exchanges.

In conjunction with the administration’s announcement, the Centers For Medicare & Medicaid Services (“CMS”) released guidance detailing the new exemption. The guidance document states that if an individual has been notified that his or her market policy will not be renewed, and the person believes that the plan options available from the Health Insurance Marketplace are more expensive than the cancelled policy and unaffordable, the person will be eligible for catastrophic coverage if the catastrophic coverage is available in their area. The premiums for catastrophic plans are reportedly lower on average than other plans in the exchanges and were previously only available to individuals under age thirty.

To purchase the catastrophic coverage, the individuals must complete a hardship exemption form and indicate that they consider other available policies unaffordable. Next, they submit the supporting documentation indicating that the previous policy has been cancelled, along with the exemption form. If the applicants are not able to submit the supporting documentation, CMS will contact the applicants and confirm that the application for exemption will not be processed until the supporting documentation of the previous policy’s cancellation is provided. The administration’s announcement is in addition to the November 14thannouncement of an administrative fix to the ACA in which persons already enrolled in plans in the individual market will be able to keep the plans through 2014, even if those plans are not compliant with the ACA. CMS has set up a helpline for those needing assistance with the new exemption option that is now officially part of the ACA.