WASHINGTON, D.C. — The Centers for Medicare & Medicaid Services (CMS) announced new measures last week to expand access to catastrophic health insurance plans beginning in the 2026 plan year, introducing hardship exemptions aimed at helping consumers manage the impact of rising premiums across the individual health insurance market.
Addressing Rising Premiums
CMS projects that health insurance premiums will see one of the most significant increases in recent years for 2026, making coverage less affordable for many households. To address this challenge, CMS released hardship exemption guidance that allows certain consumers to purchase catastrophic plans even if they would not ordinarily qualify.
The exemption applies to individuals who are ineligible for advance payments of the premium tax credit (APTC) or cost-sharing reductions (CSRs) due to their projected annual household income. These consumers will now be permitted to enroll in catastrophic plans on or off the Exchange, providing them with lower-cost coverage options designed to safeguard against major medical expenses.
Key Features of Catastrophic Plans
Catastrophic plans offer comprehensive coverage while maintaining lower monthly premiums. Under the new guidance:
- Eligibility Expansion: Individuals below 100% or above 400% of the federal poverty level (FPL), as well as those earning more than 250% of FPL who do not qualify for CSRs, may now qualify for catastrophic coverage.
- Essential Benefits: Plans include all essential health benefits mandated under the Affordable Care Act.
- Preventive Services: Consumers receive full access to preventive care without cost-sharing.
- Financial Protection: Catastrophic plans are structured to protect consumers against high medical costs stemming from serious illnesses or injuries.
Streamlined Application Process
Beginning November 1, 2025, CMS will simplify how consumers apply for catastrophic coverage through two primary methods:
- Online Applications: Consumers can apply through HealthCare.gov or via certified enrollment partners. Eligibility for hardship exemptions will be automatically evaluated based on projected household income.
- Paper Applications: Applicants can submit a hardship exemption form by mail, selecting “Hardship 14 – You experienced another hardship” and providing a brief explanation of their circumstances.
CMS also plans to expedite the review process, allowing applicants to be approved under alternate hardship categories when warranted.
HHS Announces Complementary Hardship Exemption Policy
The U.S. Department of Health and Human Services (HHS) echoed CMS’s initiative by releasing new hardship exemption guidance aimed at expanding access to affordable catastrophic health plans.
Under the updated policy, eligible consumers may purchase catastrophic coverage either on the Exchange or off the Exchange if their projected annual income makes them ineligible for APTC or CSRs.
HHS Secretary Robert F. Kennedy, Jr. called the initiative “another step in making health insurance more affordable,” adding that it builds on reforms introduced under President Trump’s health policy agenda.
CMS Administrator Dr. Mehmet Oz underscored that the changes “ensure hardworking people who face unexpected hardships can get affordable coverage that protects them from devastating medical costs.”
Impact on Consumers
With premiums expected to rise sharply in 2026, the expanded access to catastrophic plans aims to give consumers greater flexibility and choice in managing health care costs. The initiative is intended to:
- Reduce the number of uninsured Americans impacted by premium increases.
- Provide financial security against unexpected medical expenses.
- Preserve access to essential and preventive health services despite budget constraints.
Consumers will be able to begin applying for coverage on November 1, 2025, as part of the open enrollment period for the 2026 plan year.
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