In the roll out of health care reform, Americans were told that they would be able to keep their existing health insurance coverage. This proved difficult for consumers as insurance companies cancelled health plans that did not meet all of health care reform’s requirements.
Late in the game, the White House revised its position and allowed for the renewal of cancelled plans for additional time period, between January 1, 2014 and October 31, 2014, even if those plans did not offer the full coverage required by health care reform. Some states have adopted this transition policy and are allowing insurers to renew existing plans and policies. Other insurers are not renewing cancelled policies saying that at this point it is to difficult to reinstate those plans.
The Secretary of Health and Human Services issued a memo outlining options for consumers with cancelled policies. According to the memo, consumers may:
- Purchase an individual market policy from an insurer
- Shop for coverage through the Exchange
- Consider Medicaid eligibility
- Purchase catastrophic coverage if the consumer is financially eligible for a hardship exemption.
Catastrophic coverage is available to individuals age 30 or younger and those who are excepted from the individual responsibility requirements because they cannot purchase coverage for less than 8% of their income. It is also available to those who qualify for a hardship exemption. The Department of Health and Human Services has discretion to identify a hardship exemption, and has determined that the hardship exemption will be available to those with high medical debt or those who have a high cost of caring for a sick, disabled or aging family member.
All coverage options, including catastrophic coverage, should be evaluated by consumers as they think about their health insurance options for 2014 and beyond.
