Just days before the December 23 deadline to purchase health insurance, the government announced that anyone who received a cancellation notice for their individual health insurance policy now has the option to claim a hardship and either not purchase insurance at all or purchase a catastrophic health plan.
What does this really mean?
What is a Catastrophic Health Plan?
Here is the definition of a catastrophic health plan as stated on healthcare.gov:
Catastrophic health plans “meet all of the requirements applicable to other Qualified Health Plans (QHPs) but … don’t cover any benefits other than 3 primary care visits per year before the plan’s deductible is met. 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, copayments, and coinsurance are generally higher. To qualify for a catastrophic plan, you must be under 30 years old OR get a “hardship exemption” because the Marketplace determined that you’re unable to afford health coverage.”
In plain English, it is a bare-bones health insurance policy — with high out-of-pocket expenses — available to those under the age of 30. The theory behind it is simply to provide a safety net for young, healthy people against unexpected and catastrophic medical expenses.
The hardship exemption is available to anyone who has “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.” (Source, Washington Post)
According to the new guidance from the Department of Health and Human Services (HHS), a cancellation and subsequent higher premium to obtain new coverage can count as this kind of unexpected event.
What do We Think?
After 20+ years in the business of helping people protect themselves and their families by having comprehensive health insurance coverage in place, we admit our opinion may be slanted. However, we believe that responsible people buy coverage. Period.
Giving certain people a waiver is not, in our opinion, a good plan.
Here are some things to consider:
- There is no pricing in place for catastrophic plans for people over age 30. So how is that going to work?
- Exempting some people from coverage — randomly in terms of their health status, where they live, etc. — could amount to an actuarial disaster.
- Allowing only those who received a cancellation notice to claim hardship based on the expense of a new plan sets up a double standard. What about folks whose premiums went up, but did not get a cancellation notice?
- Have the states’ bureaus of insurance blessed this?
Our recommendation is, as always, to balance your anticipated medical needs with your budget and your specific situation, and then select the best coverage. We continue to be available to assist you with that selection.
Please be patient as we manage a high volume of calls and emails.