Obama Offers “Hardship Exemption” to People With Canceled Plans

Just days before the deadline to sign up for coverage, the Obama administration announced that the millions of Americans whose health care plans were canceled under the Affordable Care Act are now eligible for catastrophic coverage and will be granted an exemption from any health care-related penalties.

Kathleen Sebelius, the much beleaguered secretary of health and human services, announced the new plan in a letter to Senator Mark Warner and five other Democratic senators who'd pushed for the exemption. A catastrophic plan, which offers low premiums and minimal coverage, usually applies only to people under 30 or those who qualify for a hardship exemption.

"If the consumer believes that the plan options available in the marketplace in their area are more expensive than their canceled health insurance policy, they will be eligible for catastrophic coverage through a hardship exemption," the administration said Thursday.

The announcement comes just three days before the December 23 deadline to enroll in coverage for 2014 and six weeks after President Obama apologized to Americans who lost their existing plans because of the Affordable Care Act.

While it's not yet clear how many people will opt out of their coverage, insurance companies are worried that those who do will be the relatively healthy and young people who are cheaper to cover.

"This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers," said Karen Ignagni, president of America's Health Insurance Plans, the industry's main trade group.

Federal health officials, who estimate the number of people expected to enroll in the catastrophic coverage plan at fewer than 500,000, say it's unlikely that many of the previously insured will forgo more comprehensive coverage through the new option.

"This is a common-sense clarification of the law," Joanne Peters, a spokeswoman for the Department of Health and Human Services, told the Washington Post. "For the limited number of consumers whose plans have been canceled and are seeking coverage, this is one more option."

[Image via AP]