Cancelled Insurance Now Exempts People From Individual Mandate

By:  Michael Tennant
Cancelled Insurance Now Exempts People From Individual Mandate

The Obama administration recently exempted from ObamaCare's individual mandate all Americans whose health insurance policies have been cancelled under the law.

Despite longstanding resistance to Republicans’ calls for delaying ObamaCare’s individual mandate, the Obama administration announced December 19 that it would be doing just that for Americans whose health insurance policies were cancelled because they did not comply with the Affordable Care Act (ACA).

In response to a letter from six senators (five Democrats and one Independent) expressing concern over their constituents’ loss of health insurance under ObamaCare, the Department of Health and Human Services (HHS) declared that individuals whose non-compliant policies were cancelled will now qualify for a “hardship exemption” from the individual mandate for 2014. Essentially, anyone who lost coverage because of ObamaCare is free to ignore the law’s requirement that he have health insurance or pay a penalty. In addition, he has the option of purchasing catastrophic coverage that he would not otherwise be permitted to buy under the ACA.

The hardship exemption allows an individual to escape the individual mandate if that person has “experienced financial or domestic circumstances, including an unexpected natural or human-caused event, such that he or she had a significant, unexpected increase in essential expenses that prevented him or her from obtaining coverage under a qualified health plan,” HHS explained in a June bulletin.

This provision was intended to help those who have experienced major financial upheavals such as divorce, bankruptcy, or homelessness. But now, HHS Secretary Kathleen Sebelius said in a letter to the senators, “this exemption applies to those with canceled plans who might be having difficulty paying for an existing ... plan” on an ObamaCare exchange. That means that, for 2014, those individuals now have the option of either buying catastrophic coverage — something generally restricted to those under 30 years of age — or foregoing coverage altogether. “For these people, in other words, Obamacare itself is the hardship” that triggers the exemption from ObamaCare, remarked Ezra Klein of the Washington Post.

How did the administration find itself in the position of having to waive the individual mandate for some people?

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