In a press release on September 4, the U.S. Department of Health and Human Services (HHS) announced it is implementing measures to increase access to more affordable catastrophic health coverage through HHS’s new hardship exemption guidance. According to the news brief, the guidance simplifies access to cheaper catastrophic coverage for consumers who are ineligible for advance payments of the premium tax credit (APTC) or cost-sharing reductions (CSRs).

The Centers for Medicare & Medicaid Services (CMS) made this change in response to the expected increase in individual market premiums and the expiration of the enhanced premium tax credits at the end of the year, the American Hospital Association (AHA) noted.

Previously, Healthcare Innovation reported on a study from the Commonwealth Fund and the George Washington University Milken Institute School of Public Health, which found that if Congress allowed enhanced premium tax credits to expire at the end of 2025, communities across the country would face significant economic impacts. “The enhanced premium tax credits, which began in 2021 and were extended through 2025 by the Inflation Reduction Act, have made Affordable Care Act (ACA) health insurance marketplace plans more affordable for millions of Americans,” contributing senior editor David Raths wrote.

More Americans will qualify for catastrophic health coverage based on need starting November 1st, when open enrollment begins. Eligibility will be determined by estimated annual household income. “Catastrophic plans generally have lower monthly premiums, are designed to protect consumers from very high medical costs in the event of serious illness or injury, and are required to cover three primary care visits pre-deductible,” HHS explained.

CMS released a fact sheet on HHS’s hardship exemption guidance for catastrophic coverage, noting that significant rate increases can cause hardship in obtaining coverage under a QHP, especially for consumers whose income disqualifies them from receiving APTC or CSRs to reduce their out-of-pocket costs.