HHS opens catastrophic coverage to more uninsured Americans: 5 notes

The U.S. Department of Health and Human Services will expand access to catastrophic health plans beginning Nov. 1 through new hardship exemption guidance, the agency announced Sept. 4.

The expanded eligibility may reduce uncompensated care burdens for hospitals and health systems by bringing more low-income patients into coverage — particularly those who previously fell into the subsidy gap. With premium increases likely to impact coverage retention in the individual market, the catastrophic exemption offers a potential buffer against payer mix deterioration heading into 2026.

Bad debt and charity care for nonprofit hospitals has been on the rise; it’s up 34% since 2022 and 8% year-over-year through June, according to Kaufman Hall.

Five things to know:

1. CMS is implementing the policy across the federally-facilitated exchange and participating state-based exchanges. Consumers who are ineligible for advance premium tax credits or cost-sharing reductions due to projected annual household income may qualify for an exemption and enroll in a catastrophic plan, either on or off the exchange.
2. Consumers with projected annual income of below 100% or above 400% of the federal poverty level are eligible for the hardship exemption, and CMS is expanding access to include consumers who are over 250% of the federal poverty level and only ineligible for cost-sharing reductions. People under the age of 30 will continue to qualify for catastrophic plans.
3. Catastrophic plans cover all essential health benefits required under the ACA and include three primary care visits before the deductible. These plans are generally designed with lower monthly premiums and offer full access to preventive services without cost-sharing.
4. CMS said the move aims to help consumers afford coverage amid projected premium increases for the 2026 plan year — expected to be among the most significant in recent years.
5. Beginning Nov. 1, eligible consumers may apply online through HealthCare.gov or submit a paper application. Online applicants will be automatically assessed for hardship exemption eligibility based on income. CMS also plans to streamline the paper process by reviewing all hardship categories for flexible approval where appropriate.

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