Reform Alert - News from the Blues' Office of National Health Reform

UPDATE: CMS releases new guidance for individuals with canceled plans

Dec. 23, 2013

On Dec. 19, the Centers for Medicare and Medicaid Services (CMS) released new guidance allowing individuals whose 2014 plans were cancelled to purchase catastrophic coverage.

Effective immediately, customers who have had their policies cancelled can complete a hardship eligibility form from CMS. They also must have proof of their policy cancellation (such as the cancellation letter). Interested customers should submit their cancellation letter (or alternative proof of cancellation) along with the hardship exemption form. This documentation should be submitted to the insurer they are interested in purchasing catastrophic coverage from.

If the customer is requesting catastrophic coverage through the same insurer that sent the customer a cancellation letter, the issuer may be able to validate the cancellation.

Insurers will submit the hardship exemption form and proof of cancellation to CMS for hardship eligibility approval. Insurers can then enroll these members into the applicable off-Marketplace catastrophic plan.

These catastrophic plans are at a lower premium rate, and have a significantly higher out-of-pocket cost associated with them, but they include all of the essential health benefits mandated by the Affordable Care Act.

Consumers should be aware that catastrophic plans do not qualify for premium tax credits or cost share subsidy.

As a reminder, consumers have additional options for purchasing coverage if their policy has been cancelled, including:

  • You can purchase individual coverage directly from your health care issuer.
  • If eligible, you can purchase health care coverage from the Health Insurance Marketplace. You may also be eligible for cost sharing reductions or premium tax credits to help cover the costs of the plan you purchase through the Marketplace.
  • You can shop for coverage off the Marketplace. Consumers should be aware that buying coverage off the Marketplace does not qualify them for cost sharing assistance or premium tax credits.

The information in this document is based on preliminary review of the national health care reform legislation and is not intended to impart legal advice. The federal government continues to issue guidance on how the provisions of national health reform should be interpreted and applied. The impact of these reforms on individual situations may vary. This overview is intended as an educational tool only and does not replace a more rigorous review of the law's applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. As required by US Treasury Regulations, we also inform you that any tax information contained in this communication is not intended to be used and cannot be used by any taxpayer to avoid penalties under the Internal Revenue Code.