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20 Dec, 2013 16:40

White House lifts Obamacare mandate for people whose insurance was cancelled due to Obamacare

White House lifts Obamacare mandate for people whose insurance was cancelled due to Obamacare

The Obama administration announced that all individuals who suffered a cancellation of their health care coverage due to the Affordable Care Act’s new requirements will be “temporarily” exempted from the individual mandate.

The announcement came Thursday evening, as the ACA continues to undergo revisions on the fly in response to criticism stemming from its troubled rollout. It also arrives shortly before the law’s December 23 deadline, which requires anyone wishing for their coverage to continue into 2014 uninterrupted to have a plan in place.

Under the new rules, Americans whose coverage was cancelled will qualify for the individual mandate’s “hardship exemption.” This means they can either purchase cheaper catastrophic insurance plans that are otherwise only available to those under the age of 30, or they can decline to purchase insurance altogether.

According to the Department of Health and Human Services (HHS), the exemption extends to those who "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 Secretary Kathleen Sebelius revealed the decision in a letter written to a group of six Democratic Senators, led by Mark Warner (Va.), who had originally requested the change.

Health and Human Services Secretary Kathleen Sebelius (Rod Lamkey / Getty Images / AFP)

"I agree with you that these consumers should qualify for this temporary hardship exemption and I can assure you that the exemption will be available to them,” Sebelius wrote. "As a result, in addition to their existing options these individuals will also be able to buy a catastrophic plan to smooth their transition to coverage through the Marketplace."

It’s unclear exactly how many people this rule change will affect, though some experts estimate that up to five million Americans have had their plans cancelled for failing to provide “essential benefits” under the ACA – such as prescription drugs and hospitalizations. Following severe public backlash, President Obama apologized for the situation, announcing he’d allow insurance companies to offer the cancelled plans for an additional year.

For its part, the administration expects fewer than 500,000 individuals with cancelled plans to remain without insurance heading into 2014.

"This is a common-sense clarification of the law. For the limited number of consumers whose plans have been cancelled and are seeking coverage, this is one more option," Department of Health and Human Services spokeswoman Joanne Peters said to the Huffington Post.

One of the issues complicating the situation is that Healthcare.gov is still not capable enough to accommodate everyone currently shopping the online marketplace for insurance.

"There still may be a small number of consumers who are not able to renew their existing plans and are having difficulty finding an acceptable replacement," Sebelius added in her letter.

The decision was quickly criticized by insurance groups, however, who believe the White House is taking the possibility of millions of people choosing to opt out of the mandate too lightly. Insurers have also announced they would accept late first payments until January 10.

“This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers," said Karen Ignani, head of the trade group America's Health Insurance Plans, to the Washington Post.

The decision is expected to come under fire by Republicans as well, who have argued in the past that the individual mandate should be delayed for all Americans, not just select groups.