If you have received a notice that your health insurance plan is canceled, you are probably wondering what to do next. With so many changes occurring due to health care reform, you need to know how to obtain health coverage. Read on for information about why policies are being canceled and what new options are available if you have a canceled policy.
Why Do I Have a Canceled Policy?
The health care reform law, the Affordable Care Act (ACA), includes new coverage standards for health insurance policies beginning in 2014. Over the last few months, millions of Americans have received cancelation notices because their health insurance plans do not comply with the ACA’s reforms. If your health insurance plan does not meet these new standards, your insurance company would have sent you a notice that your plan is being canceled.
On Nov. 14, 2013, President Obama announced a transition policy for canceled plans. Under this transition policy, insurance companies would be allowed to renew health insurance plans for another year, even if they are not compliant with the ACA. However, each state must decide if it will adopt this transition policy, and not all states are allowing canceled policies to be renewed. In addition, even if a state adopts the transition policy, insurance companies can choose not to renew non-compliant plans.
What Are My Options for Getting Coverage?
If you have a canceled health plan, you already have several options for health coverage:
- You can purchase any individual market health insurance policy that is available to you in 2014 from your insurance company.
- You can shop for insurance coverage through a health insurance Marketplace. Depending on your income and other factors, you may be eligible for a premium tax credit, cost-sharing reductions or Medicaid.
- You can shop for other insurance policies outside the Marketplace.
However, if your policy is canceled and available coverage is too expensive, you now have new options available to you.
What Are My New Options?
On Dec. 19, 2013, the Department of Health and Human Services (HHS) announced that if your coverage was canceled, you are eligible for a hardship exemption from the individual mandate and will be able to enroll in catastrophic coverage.
What is the Hardship Exemption?
The hardship exemption is intended for individuals who have suffered a hardship that makes it difficult to pay for health insurance coverage. You are eligible for a hardship exemption if:
- You experienced financial or domestic circumstances that unexpectedly caused a significant increase in your essential expenses.
- Purchasing the required minimum essential health coverage would make you unable to afford sufficient food, shelter, clothing or other necessities.
- You experience any similar difficulties that prevent you from purchasing the minimum essential health coverage.
- You are in a situation that HHS lists as constituting a hardship.
To receive the hardship exemption, you will need to apply for the exemption through a Marketplace using the hardship exemption form and submit proof that your policy has been canceled.
If you receive a hardship exemption from the individual mandate, you will not have to pay a penalty for not having health insurance. In addition, you will be eligible for catastrophic coverage.
What Is Catastrophic Coverage?
Catastrophic coverage protects you from very high medical costs. You can purchase catastrophic coverage under the new transition policy if you meet all of the following requirements:
- Your plan has been canceled.
- The insurance coverage options that are available in the Marketplace are more expensive than your canceled policy.
- Catastrophic coverage is offered where you live.
If you want to purchase catastrophic coverage, you will need to complete a hardship exemption form stating that your current health insurance policy is being canceled and that other available policies are not affordable.
With a basic understanding of the options available, you can now make the best decision possible regarding health insurance for you and your family.