CMS Increases Access to Catastrophic Plans in Lieu of Extending Enhanced Premium Tax Credits

In lieu of extending the Affordable Care Act (ACA) enhanced premium tax credits, the Trump administration is boosting access to catastrophic plans.

Catastrophic plans cover preventative care but carry very high deductibles. Historically, they’ve only been available for people under 30 who don’t otherwise qualify for subsidies, but the Department of Health and Human Services (HHS) announced last week it would lower those barriers and allow anyone to enroll through a “hardship exemption,” so long as their income is above 250% of the federal poverty level. STAT notes that policy analysts believe the move will lead to sick people enrolling in these plans, spiking premiums in 2027 or causing carriers to drop the plans entirely.

The application process for catastrophic plans will be available beginning November 1, the Centers for Medicare and Medicaid Services (CMS) explains. Applicants may apply for hardship eligibility through HealthCare.gov, or the hardship exemption form can be submitted for expedited review. The agency also boasts “financial protection against serious illness or injury that could result in devastating medical expenses.”

The announcement was met with skepticism by the Biden administration’s ACA exchange director, not only for announcing the policy shift on such short notice but also for leaving insurers out of the loop until after they priced out their products for 2026. Former Center for Consumer Information and Insurance Oversight (CCIIO) Director Ellen Montz told Inside Health Policy that the sudden policy shift also introduces further chaos to an already turbulent season, given that the administration is asking a federal court to reverse a ruling that prohibits CMS from implementing a rule to change some provisions for the open enrollment period.

Healthcare Innovation notes that communities across the country will be threatened with serious economic impacts if the enhanced premium tax credits should be allowed to expire at the end of the year. The expected expiration is driving the anticipated spike in individual market premiums for 2026.

The high cost of health care is continuously reported as a top financial worry for American adults and their families. Earlier this summer, KFF reported the results of a poll  that showed just under half of U.S. adults reporting difficulty managing health care costs, and nearly 75% of adults under 65 have reported forgoing needed healthcare because of the cost.