CMS Creates Options for Individuals with Canceled Policies
The Centers of Medicare & Medicaid (CMS) announced if an individual has been notified that his or her individual market policy will not be renewed, he or she will be eligible for a hardship exemption and will be able to enroll in catastrophic coverage. This means that these individuals would not be subject to the individual mandate penalty. If an individual believes that the plan options available in the Marketplace in his or her area are more expensive than his or her cancelled health insurance policy, he or she will be eligible for catastrophic coverage if it is available in his or her area.
In order to purchase this catastrophic coverage, an individual needs to complete a hardship exemption form, and indicate that his or her current health insurance policy is being cancelled and he or she considers other available policies unaffordable. The individual will then need to submit the following items to an issuer offering catastrophic coverage in his or her area:
the hardship exemption form; and supporting documentation indicating that your previous policy was cancelled. For example, you can submit your cancellation letter or some other proof of cancellation.
If an individual is applying for catastrophic coverage from the same insurance company that cancelled his or her previous policy, the insurance company may be able to confirm that based on its internal records. The individual may then purchase catastrophic coverage from that insurance company. Your insurance company will send these items to CMS, and CMS will verify that you were eligible for this hardship exemption. If an individual is not able to submit supporting documentation at the time, he or she submits the exemption form, CMS will contact you to let the individual know his or her application is incomplete and cannot be processed until the individual submits supporting documentation of his or her previous policy’s cancellation. If an individual is interested in pursuing this option, and he or she needs assistance, he or she should call the call center at: 1-866-837-0677.
Under 1302(e) of the Affordable Care Act, a catastrophic plan is one that provides coverage for essential health benefits and provides no benefit for any plan year until the individual has incurred cost-sharing expenses equal to the overall cost-sharing limit (described above) for the plan year. The deductible cannot apply to at least three primary care visits. A catastrophic plan is permitted only in the individual market and only for (a) young adults who are under age 30 before the plan year begins (a group sometimes referred to as the “young invincibles” because they are more likely than older populations to forego insurance), and (b) those persons exempt from the individual mandate because affordable coverage is not available or they have a hardship exemption.
