Obamacare: White House policy shift on cancelled plans will apply in California

The head of the state-run health insurance marketplace said Saturday that President Obama’s policy shift regarding cancelled individual plans will apply in California.

On Thursday the administration said people whose plans are cancelled can apply for a temporary hardship exemption that would let them buy catastrophic coverage  that conforms to the Affordable Care Act. Covered California Executive Director Peter Lee indicated that his agency doesn’t have a choice about adopting the new approach. 

"There’s no position to take" on the matter, said Lee. "That’s a new definition of what the hardship criteria is, [so] we’ll administer that in California."

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Speaking at an ACA enrollment event at AltaMed Health Insurance Resource Center in east L.A., Lee asserted that "the vast majority" of those newly eligible for catastrophic plans "don't necessarily want" such a plan because they are searching for "good value," and catastrophic plans generally are not a good value compared with the plans offered through Covered California.

Related Material: FAQ on navigating Covered California

The ACA requires insurers to cancel individual plans that don't provide ten essential health benefits. Previously, people with cancelled plans were required to replace them with a more robust plan (which would probably carry a higher premium than a catastrophic policy). 

Besides giving people with a temporary hardship exemption the option of buying a catastrophic plan, the new White House rules give them the option of not buying insurance at all this next year (and avoiding the federal tax penalty) if they believe that other plans offered in Covered California are unaffordable. 

Related material: The full list of exemptions from the tax penalty under the Affordable Care Act.

Correction: This story was updated on Dec. 22, 2013 to correct the statement regarding the type of catastrophic plans people with cancelled policies can buy. A previous version said those plans did not have to be ACA-compliant. The update also notes that people with cancelled plans who obtain a temporary hardship exemption can opt out of buying insurance and avoid the federal tax penalty. The sentence regarding what the ACA requires insurers to cover was amended to say "ten essential health benefits," rather than "preventive services." Some, but not all, of the ten benefits are preventive services.