It said it would allow individuals whose health insurance was cancelled under ObamaCare to buy catastrophic plans once intended mainly for young people. Important to note that this latest policy shift from Washington only effects those individuals, perhaps as many as the 5.6 million individuals, who recent received cancellation notices
The significant change comes just before a deadline people faced for choosing plans to ensure they had coverage on Jan. 1. There was simply not enough time to allow all these people with recent policy cancellations to choose new plans in a federal environment that continues to struggle with even being open for business.
The move is a response to a group of Democratic senators who had sought a change, and can be seen as part of a series of efforts the administration has made to respond to Democrats worried about how troubles with the law could play in next year’s midterms.
The guidance was laid out in a letter to Sens. Mark Warner (D-Va.), Jeanne Shaheen (D-N.H.), Mary Landrieu (D-La.), Heidi Heitkamp (D-N.D.), Angus King (I-Maine) and Tim Kaine (D-Va.), who asked the administration on Wednesday to clarify whether those who had their plans cancelled could qualify for the exemption.
Health and Human Services Secretary Kathleen Sebelius confirmed the changes, which include letting those individuals skirt the law’s individual mandate, in a letter to senators. She said she would allow people who got cancellations and could not find affordable new coverage to qualify for a “hardship exemption” in order to avoid a penalty next year for not having insurance.
Offering further clarification in June 2013 about what would qualify a person for a “hardship” exemption, CMS said a person could get a hardship exemption if he or she:
- becomes homeless;
- has been evicted in the past six months, or is facing eviction or foreclosure;
- has received a shut-off notice from a utility company;
- recently experienced domestic violence;
- recently experienced the death of a close family member;
- recently experienced a fire, flood, or other natural or human-caused disaster that resulted in substantial damage to the individual’s property;
- filed for bankruptcy in the last 6 months;
- incurred unreimbursed medical expenses in the last 24 months that resulted in substantial debt;
- experienced unexpected increases in essential expenses due to caring for an ill, disabled, or aging family member;
- is a child who has been determined ineligible for Medicaid and CHIP, and for whom a party other than the party who expects to claim him or her as a tax dependent is required by court order to provide medical support. We note that this exemption should only be provided for the months during which the medical support order is in effect; or
- as a result of an eligibility appeals decision, is determined eligible for enrollment in a QHP through the Marketplace, advance payments of the premium tax credit, or cost-sharing reductions for a period of time during which he or she was not enrolled in a QHP through the Marketplace, noting that this exemption should only be provided for the period of time affected by the appeals decision.
With this latest change, a new circumstance is added to this list:
- Your individual insurance plan was cancelled and you believe other Marketplace plans are unaffordable.
Further, she announced that those individuals will be able to purchase bare-bones plans that until now were available only for people under 30.
The move, though, to allow potentially hundreds of thousands of people to sign up for “catastrophic” coverage plans was criticized by the insurance industry as a shift that would cause “tremendous instability.”
The administration, which made the announcement right before the holiday break and as President Obama prepared to fly to Hawaii for vacation, downplayed the sudden change, saying they expected it to impact fewer than 500,000 people.
gbac’s Association Practice Group is busy building private, association-based health insurance and employee benefits marketplaces for their members. Our marketplace has more than a decade of proven success serving the private marketplace needs of large businesses and now is being used by an increasing number of associations for the benefit of thousands of small businesses that otherwise would never have had access to these robust, competitive marketplaces by themselves.
Regardless of what happens in the benefits industry, or from government, association members will always have a safe, reliable, proven competitive marketplace to meet their benefit needs. As government continues to struggle, our private sector solution works every day.