Cancelled Health Plans leads to
Exemptions, and Catastrophic Health Plans
As the deadline has come and gone to sign up for Obamacare plans to start later this week on January 1, 2014. There are still individuals wondering what happens if they were part of the 5 million individuals who received letters from their insurance companies a couple of months ago stating their policies would not longer be in effect in 2014, due to its failure to meet the minimum essential benefits set in place by the Affordable Care Act. This month the Obama administration offered individuals in this predicament a list of options, including something new, the ability to sign up for Catastrophic coverage. This new exception has also given anyone with a canceled policy a hardship exemption legally excusing them from having to pay a penalty if they go without coverage in 2014.
“If you have been notified that your individual market policy will not be renewed, you will be eligible for a hardship exemption and will be able to enroll in catastrophic coverage,” said a memo issued by the Department of Health and Human Services
Options for Consumers with Cancelled Health Plans
- You have the chance to buy any of your health insurance issuer’s individual market policies available to you in 2014. If your state choose to extend plans, your policy maybe renewed.
- You may shop for coverage through the Health Insurance Marketplace (the Marketplace).
- Depending on your income and other factors, you may 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. You may also be eligible for Medicaid.
- You can also shop for policies outside the Marketplace. This is a good option if you do not qualify for premium tax credits or cost-sharing reductions based on your income. If you do qualify for premium tax credits or cost-sharing reductions, you can only get such assistance if you enroll through the Marketplace.
Catastrophic Health Plans
A new option available for these groups with cancelled health plans now include the ability to sign up for catastrophic plans. Catastrophic Health plans are much cheaper for most healthy individuals. The premium amount you pay each month for health care is generally lower than for other QHPs, but the out-of-pocket costs for deductibles, co-payments, and coinsurance are generally higher. While originally designed for individuals under the age of 30, the administration is now making it available for those with cancelled plans. What does a catastrophic plan include, and not include?
- Three primary care visits per year at no cost
- Catastrophic Plans do offer Free Preventative services and medical costs that exceed catastrophic amounts. (2014, that’s $6,300 for an individual).
- Catastrophic plans are available for those under 30, and those who could demonstrate specific financial hardships.
- Catastrophic plans do not allow subsidies to be applied towards premium.
Purchasing a Catastrophic Plan
In order to purchase this catastrophic coverage, you need to complete a hardship exemption form, and indicate that your current health insurance policy is being cancelled and you consider other available policies unaffordable. You will then need to submit the following items to an issuer
offering catastrophic coverage in your area:
(1) the hardship exemption form; and
(2) supporting documentation indicating that your previous policy was cancelled.
For example, you can submit your cancellation letter or some other proof of cancellation. If you are applying for catastrophic coverage from the same issuer that cancelled your previous policy, the issuer may be able to confirm that based on its internal records. You may then purchase catastrophic coverage from that issuer. Your issuer will send these items to CMS, and CMS will verify that you were eligible
for this hardship exemption. If you are not able to submit supporting documentation at the time you submit the exemption form, CMS will contact you to let you know your application is incomplete and cannot be processed until you submit supporting documentation of your previous policy’s cancellation. If you are interested in pursuing this option, and you need assistance, you can call 1-866-837-0677.