Overview
The Centers for Medicare & Medicaid Services (CMS) is working to expand access to catastrophic health coverage in the Federally-facilitated Exchange (FFE) through additional hardship exemption guidance, specifically designed to help consumers access coverage as a result of the premium increases anticipated for the 2026 plan year. This guidance describes circumstances that will support a hardship exemption for individuals who find themselves ineligible for advance payments of the premium tax credit (APTC) or cost-sharing reductions (CSRs) due to their projected annual household incomes, enabling access to more affordable, catastrophic coverage.
Key Facts
Premium Increases and Market Conditions
Health insurance premiums are projected to rise substantially for the 2026 plan year across the individual market, representing one of the most significant increases in recent years. The impact of significant rate increases may result in a hardship in obtaining coverage under a QHP, especially for consumers whose income disqualifies them to receive APTC or CSRs to lower their out-of-pocket costs. Therefore, a consumer may qualify for an exemption to purchase a catastrophic plan on or off an Exchange in accordance with 45 CFR §155.605(d)(1)(iii) if they are determined or expect to be ineligible for APTC or CSRs based on their projected annual household income.
Catastrophic Plan Benefits
- Generally, consumers who are newly ineligible for APTC or CSRs due to their projected annual income (below 100 percent or above 400 percent of the federal poverty level (FPL)) will be eligible for a hardship exemption and can enroll in catastrophic coverage. CMS plans to begin streamlining this process for consumers ineligible for APTC due to income and expand to consumers who are over 250% of the FPL and are only ineligible for CSRs.
- This guidance applies to consumers in FFE States, and participating State-based Exchanges (SBEs) and will be made available to those seeking coverage off the Exchange.
- Catastrophic Plans: These plans provide all essential health benefits required under the Affordable Care Act while maintaining lower premiums designed for financial accessibility.
- Financial Protection: Comprehensive coverage is designed to provide financial protection against serious illness or injury that could result in devastating medical expenses.
- Preventive Care: Full access to preventive services without cost-sharing requirements. Catastrophic coverage may present an affordable coverage option for consumers who are ineligible for APTC or CSRs due to their projected annual household income, and may protect against worst-case scenarios, like getting seriously sick or injured.
Streamlined Application Options (Starting November 1, 2025)
Option 1: Online Application Process (New)
- Apply for health coverage with financial assistance through HealthCare.gov or through certified enhanced direct enrollment partners. Hardship eligibility will be automatically evaluated based on projected annual household income data provided during the application process.[1]
Option 2: Paper Application Process (Existing)
- Complete the hardship exemption form by selecting "Hardship 14 – You experienced another hardship" from the available options in Section 2 of the form.
Provide a brief explanation of the specific circumstances giving rise to the hardship that prevent access to affordable coverage.
- Expedited Review Process: CMS has implemented procedures that may approve applicants for different hardship reasons than originally requested when circumstances warrant such flexibility.
[1] CMS plans to begin streamlining this process for consumers ineligible for APTC due to income and expand to consumers who are over 250% of the federal poverty level (FPL) and are only ineligible for cost sharing reductions.