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Small Business Employee Benefits and HR Blog

Health Plan Canceled? New Individual Mandate Waiver, and Catastrophic Plan Option

According to the Department of Health and Human Services (HHS), millions of people facing the cancellation of health insurance plans will be allowed to buy catastrophic coverage, and be temporarily exempt from the individual mandate penalties in 2014.New Rules for Those with Cancelled Health Plans

Here's what you need to know about this recent ACA delay, announced yesterday by HHS.

The individual mandate includes a "hardship exemption." People who qualify for this exemption can purchase a less expensive, bare-bones catastrophic insurance plan that was previously reserved for people under 30. 

According to HHS, the exemption covers people who "experienced financial or domestic circumstances, including an unexpected natural or human-caused event, such that he or she had a significant, unexpected increase in essential expenses that prevented him or her from obtaining coverage under a qualified health plan."

Yesterday, the administration agreed with a group of senators, led by Mark Warner of Virginia, who argued that having your insurance plan canceled counted as "an unexpected natural or human-caused event."

Read HHS Secretary Kathleen Sebelius' full letter here. HHS's formal guidance is here.

What this delay means for those with a canceled health plan

According to HHS, if your individual market health insurance policy has been canceled:

  • You will be eligible for a hardship exemption and will be able to enroll in catastrophic coverage.
  • In order to purchase catastrophic coverage, you need to complete a hardship exemption form, and indicate that your current health insurance policy is being canceled and you consider other available policies unaffordable. 
  • This exemption can also be used to temporarily waive the individual mandate penalties for 2014.

What the media's saying about this delay

Here's what various news outlets are saying about the announcement.

Another Rule in Health Law Is Scaled Back - NY Times

(12/20) Millions of people facing the cancellation of health insurance policies will be allowed to buy catastrophic coverage and will be exempt from penalties if they go without insurance next year, the White House said Thursday night.

The Individual Mandate No Longer Applies to People Whose Plans Were Canceled - Washington Post

(12/19) Today, the Obama administration announced that people whose insurance plans were canceled this year will "temporarily" be exempted from the law's individual mandate. Here's how they're doing it -- and what it means for the law.

Obama Administration to Delay Individual Mandate for Some - National Journal

(12/19) The Obama administration will not require the millions of Americans who received health-insurance plan cancellation notices to purchase a new policy next year. They're granting those consumers an exemption from the Affordable Care Act's individual mandate, a Department of Health and Human Services spokeswoman confirmed. The mandate requires everyone to have health insurance or face a tax penalty, the greater of $95 or 1 percent of income in 2014. The administration will also allow those consumers to sign up for catastrophic coverage. Those bare-bones plans are available to people who are under 30 or qualify for a "hardship exemption."

HHS loosens rules for those who lost health care plans - USA Today

(12/20)  Americans whose insurance policies were canceled this year will be excused from paying fees due to the individual mandate, the Department of Health and Human Services said in a letter sent to lawmakers. The new change, announced in a letter to six legislators, will affect those who have not already gotten new insurance coverage after receiving a cancellation letter.

Is this delay a helpful gesture for those scrambling to secure health insurance coverage, or a slippery slope with the individual mandate? Leave a comment below.

 

Photo credit: Flickr, bionicteaching

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