New individual mandate exemption raises market concerns

The Obama Administration tacked a 13th hardship exemption onto the Affordable Care Act before the end of year, offering people with cancelled plans relief from the individual mandate and expanding eligibility for catastrophic plans.

On HealthCare.gov HHS added another case to the types of hardship exemptions from the "individual responsibility payment": If "Your individual insurance plan was cancelled and you believe other Marketplace plans are unaffordable."

The new policy tweaks originated from the White House and were unveiled Dec. 19, in an attempt to try to help mitigate financial volatility for consumers with cancelled plans. Those with cancelled plans will also be allowed to buy catastrophic plans that, as Healthcare.gov says, "usually have lower premiums than a comprehensive plan, but cover you only if you need a lot of care" and also don't come with premium subsidies.

America's Health Insurance Plans' president Karen Ignagni, however, thinks the broad new exemption could bring volatility to insurance exchanges. "This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers," Ignagni said.

Many insurance exchanges were priced assuming that at least some people with cancelled policies would end up buying the regular bronze, silver and gold plans, and perhaps even more importantly that catastrophic plans, administered in a seperate own risk pool, would be limited to people under 30 and those who can't find bronze plans for less than 8 percent of their income.

It's not clear how many people will be affected by the change or how strictly the Internal Revenue Service will enforce the "you believe other Marketplace plans aren't affordable" qualification for claiming exemption from the individual mandate payment.

With some estimates of the cancelled plans putting the number in the several millions, the new option could draw even more people away from the main insurance exchange plans, although the Obama Administration is estimating only about 500,000 will be impacted nationwide.

"This is essentially an additional net in case folks might have slipped through the crack," Obama said at a press conference. "

"We don't have precision on the numbers," he said, but "what we're talking about is a very specific population. The majority of them are either keeping their old plan...or they're finding a better deal in the marketplace."

1. You were homeless.
2. You were evicted in the past 6 months or were facing eviction or foreclosure.
3. You received a shut-off notice from a utility company.
4. You recently experienced domestic violence.
5. You recently experienced the death of a close family member.
6. You experienced a fire, flood, or other natural or human-caused disaster that caused substantial damage to your property.
7. You filed for bankruptcy in the last 6 months.
8. You had medical expenses you couldn't pay in the last 24 months.
9. You experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member.
10. You expect to claim a child as a tax dependent who's been denied coverage in Medicaid and CHIP, and another person is required by court order to give medical support to the child. In this case, you do not have the pay the penalty for the child.
11. As a result of an eligibility appeals decision, you're eligible for enrollment in a qualified health plan (QHP) through the Marketplace, lower costs on your monthly premiums, or cost-sharing reductions for a time period when you weren't enrolled in a QHP through the Marketplace.
12. You were determined ineligible for Medicaid because your state didn't expand eligibility for Medicaid under the Affordable Care Act.
13. Your individual insurance plan was cancelled and you believe other Marketplace plans are unaffordable.

In addition to attracting the right mix of people, the next big challenge for many of those exchanges is accurately processing what enrollment applications they have received.

Describing the options for consumers in a new guidance document, HHS writes that: "You can also shop for policies outside the Marketplace. This is a good option if you do not qualify for premium tax credits or cost-sharing reductions based on your income." That may end up as a boon for private exchanges like GoHealthInsurance and eHealth Insurance, as the latter chips away at eventually enrolling subsidy-eligible consumers through a web-integration with HealthCare.gov (something that doesn't yet meet the company's "standards for stability and usability.")

Meanwhile, the Treasury Department issued its latest tweak for employers, with the IRS proposing a pathway for employers to offer limited dental and vision benefits for employees while maintaining their eligibility for insurance exchange tax credits.