HHS expands catastrophic coverage eligibility

HHS plans to expand access to catastrophic health coverage through its new hardship exemption guidance, the department announced today. More people will be eligible for catastrophic coverage beginning Nov. 1, 2025, when open enrollment begins.

Catastrophic health plans typically have low monthly premiums and very high deductibles, making them a more affordable option for individuals who are seriously sick or injured. They are available for people under 30 or others who qualify for a hardship or affordability exemption.

HHS' new hardship exemption guidance will make it easier for individuals to access catastrophic coverage if they are ineligible for advance payments of the premium tax credit (APTC) or cost-sharing reductions (CSRs), based on their annual household income.

Generally, consumers who are newly ineligible for APTC or CSRs due to their projected annual income being below 100% or above 400% of the federal poverty level are eligible for a hardship exemption and can enroll in catastrophic coverage.

CMS plans to streamline this process further for individuals who are ineligible for APTC due to income and expand it to those who are over 250% of the federal poverty level and are only ineligible for CSRs.

The changes were driven by projected increases in health insurance premiums for the 2026 plan year across the individual market, CMS said in an accompanying fact sheet. Rate increases could result in challenges with obtaining coverage under a Qualified Health Plan, particularly for those whose income makes them ineligible to receive APTC or CSRs.

As such, more individuals will be able to apply for a hardship exemption online or by mail should their household income and ineligibility for APTC or CSRs meet the criteria.

"Catastrophic coverage offers affordable health insurance for younger Americans and those facing hardship to have security when they need it most," HHS Secretary Robert F. Kennedy, Jr. said in the announcement.

"Expanding access to catastrophic coverage is another step in making health insurance more affordable, building on the progress made since the passage of President Trump's One Big Beautiful Bill."

Jill McKeon has covered healthcare cybersecurity and privacy news since 2021.