Unbiased Analysis of Today's Healthcare Issues

The Hardship Provision

Written By: Jason Shafrin - Dec• 23•13

The Affordable Care Act (ACA) contains a provision, known as the individual mandate, which requires all individuals to have health insurance. Like most rules, however, there are loopholes. The most recent loopholes, however, were enacted by the Obama administration due to the problems with the Healthcare.gov website. Robert Laszewski explains:

If you had a health insurance policy that was cancelled, you are now exempt from the individual mandate and its tax penalty should you not decide to buy a replacement policy. In addition, you can now sign up for the very high deductible Catastrophic Plan that was originally reserved only for those under the age of 30.

If you did not have a health insurance policy that was cancelled, you are still subject to the individual mandate and you are not entitled any special treatment toward signing up for the Catastrophic Plan. You must pay the full price for an exchange plan and accept whatever out-of-pocket costs and network limits it might have for the money.

Health plans are not happy. Now a large number of individuals–especially those who are the healthy, “young invincibles” can bypass, the exchanges and buy bare bones plans with only catastrophic coverage.

Years from now, people may view Obamacare as a great success. Not only have the logistics of implementing the ACA provisions been bungled, but constantly changing how the provisions are being implemented (e.g., extended deadlines, hardship exceptions) has been a disaster. One of the goals of the ACA was to create a transparent market for health insurance for those without insurance. Constantly changing the rules of the exchange, however, is not good policy for promoting an efficient market.

Will health insurers start dropping from the exchanges? Only time will tell.

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