Catastrophic plan option OK'd for select group
Individuals who had their insurance plans cancelled because they did not meet the requirements of the Patient Protection and Affordable Care Act will be able to buy catastrophic plans and will not face penalties if they don't purchase insurance in 2014.
"I agree with you that these consumers should qualify for this hardship exemption, and I can assure you that the exemption will be available to them," Kathleen Sebelius, secretary of the Department of Health and Human Services (HHS) wrote in a letter to Sen. Mark Warner (D-VA) and five other senators. "As a result, in addition to their existing options these individuals will also be able to buy a catastrophic plan to smooth their transition to coverage through the Marketplace." (To read the letter, go to http://1.usa.gov/1gKHWUH.)
The Affordable Care Act provides many new consumer protections, according to HHS. In some instances, health insurance issuers in the individual and small group markets are cancelling policies that don't include the new protections for policy or plan years beginning in 2014. Because some consumers were finding other coverage options to be more expensive than their cancelled plans or policies, President Obama announced a transition period allowing for the renewal of cancelled plans and policies between Jan. 1 and Oct. 1, 2014, under certain circumstances. Some states have adopted the transitional policy, which enables health insurance issuers to renew their existing plans and policies. Some health insurance issuers are not renewing cancelled plans or policies. To ensure that consumers whose policies are being cancelled are able to keep affordable health insurance coverage, HHS has reminded consumers in the individual market of the options already available to them, and the agency is clarifying another option for consumers in the individual market.
Options for patients
If consumers' health insurance policy has been cancelled, several options already are available:
- They have the chance to buy any of their health insurance issuer's individual market policies available to them in 2014.
- They may shop for coverage through the Health Insurance Marketplace. Depending on their income and other factors, they might be eligible to receive a premium tax credit that will help cover the cost of purchasing coverage through the marketplace or cost-sharing reductions for marketplace coverage. They also might be eligible for Medicaid.
- They also can shop for policies outside the marketplace. This option is a good one if they don't qualify for premium tax credits or cost-sharing reductions based on their income. If they do qualify for premium tax credits or cost-sharing reductions, they can get such assistance only if they enroll through the marketplace.
If they have been notified that their policy will not be renewed, they will be eligible for a hardship exemption and will be able to enroll in catastrophic coverage. If they believe that the plan options available in the marketplace in their area are more expensive than their cancelled health insurance policy, they will be eligible for catastrophic coverage if it is available in their area. To purchase this catastrophic coverage, they need to complete a hardship exemption form, which is available at http://marketplace.cms.gov/getofficialresources/publications-and-articles/hardship-exemption.pdf. They need to indicate that their current health insurance policy is being cancelled and they consider other available policies unaffordable. They then will need to submit the following items to an issuer offering catastrophic coverage in their area: (1) the hardship exemption form; and (2) supporting documentation indicating that their previous policy was cancelled. For example, they can submit their cancellation letter or some other proof of cancellation. If they are applying for catastrophic coverage from the same issuer that cancelled their previous policy, the issuer might be able to confirm that information based on its internal records. They then may purchase catastrophic coverage from that issuer. Their issuer will send these items to the Centers for Medicare and Medicaid Services (CMS), and CMS will verify that they were eligible for this hardship exemption. If they aren't able to submit supporting documentation at the time they submit the exemption form, CMS will contact them to let them know the application is incomplete and cannot be processed until they submit supporting documentation of their previous policy's cancellation. If patients are interested in pursuing this option, and they need assistance, they can contact the call center at (866) 837-0677.