Hardship Exemptions

Hardships

Hardships are life situations that keep you from getting health insurance. In the early years of Obamacare there was a penalty for not having health insurance. But, fi you qualify for a hardship exemption, you did not have to pay a penalty for the months the exemption applies.

♦ Starting with the 2019 plan year, the penalty was eliminated. If you did not have insurance during 2019 or later, you did not need an exemption.

However, if you wish to purchase a catastrophic health insurance plan, and you are were the age of 30, you still have to request a hardship exemption.

► Starting from 2027 the rules change. The under-30 limit is removed. Risk-tolerant consumers can enroll regardless of age.

Even though the individual mandate's penalty is gone, you would still need to request a hardship exemption from the "mandate" to be able to buy a catastrophic plan.

♦ Here is a link to hardship and affordability exemption forms.

• You may not need the forms. The process for requesting a Hardship Exemption has been completely automated now. Previously it was tedious and time consuming.

Getting a hardship exemption

You no longer file a standalone hardship request. Instead, you fill out your standard health insurance application on HealthCare.gov or your state-run exchange.

If you want a catastrophic health plan due to an income-based hardship, the system handles it entirely on its own.

However, if you are 30 and older and  your income falls into the middle tier, you would still need to manually request a hardship exemption if you are suffering from specific personal circumstances (such as experiencing homelessness, bankruptcy, domestic violence, or a natural disaster).

By manually, this means you have to submit an application form and personal documentation to prove your life circumstances - it does not happen automatically.

To manually claim a hardship health coverage exemption, you must fill out a paper application and mail it to the Health Insurance Marketplace.

♦ Not to be confused with Coverage Exemptions, which relate to gaps in insurance coverage due to circumstances other than hardship.

How long do hardship exemptions last?

Hardship exemptions usually cover the month before the hardship, the months the hardship took place, and one month after the hardship.

For severe, ongoing personal or financial disruption, a caseworker can manually extend the exemption to cover the entire year.

Examples might be: filing for bankruptcy, ongoing homelessness, holding substantial medical debt.

• Reapplication Rule: Hardship exemptions do not automatically renew. If a person's crisis is ongoing, they need to submit a new paper application.

New 2027 Exception

If you apply using the automated system and qualify for the new-income based hardship exemption (by earning below 100% or above 250% FPL), your exemption is automatically locked in for the full 12 months of the plan year.

• Below 100% FPL: People who make too little to qualify for standard Obamacare subsidies, but live in a state (like Georgia) that did not expand Medicaid. This is often called the "Medicaid Gap."
• Above 250% FPL: Moderate-to-high earners who make too much to qualify for Cost-Sharing Reductions (which lower deductibles and copays on Silver plans). For them, the cost of regular insurance is deemed an unfair burden relative to their income.

Circumstances that may qualify for a Hardship Exemption

• You were homeless
• You were evicted in the past or were facing eviction or foreclosure
• You received a shut-off notice from a utility company
• You recently experienced domestic violence
• You recently experienced the death of a close family member
• You experienced a fire, flood, or other natural or human-caused disaster that caused substantial damage to your property
• You filed for bankruptcy
• You had medical expenses you couldn’t pay
• You experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member
• Another individual is legally required to provide medical support for a child the consumer claims as a dependent on his/her tax return, and the child was denied Medicaid/CHIP, this exempts the tax filer from the shared responsibility payment for the child
• Appeals decision found the individual eligible for enrollment in a QHP for time period when he or she wasn’t enrolled in a QHP
• Doesn’t qualify for Medicaid solely based on a state’s decision not to expand Medicaid eligibility
• Individual insurance plan was cancelled and consumer believes available plans are unaffordable
• Experienced another hardship, may be used for specific scenarios described in CMS guidance (ex: new guidance for AmeriCorps, Vista, and NCCC members)

Affordability

If you ask for hardship exemption based on affordability, the application process is different than that for life crisis events.

Because affordability exemptions rely on math rather than life crisis the application window and enrollment options are much more restrictive compared to crisis-based hardship request.

You may apply through the Marketplace during open enrollment. You can apply during a special enrollment period but you must already have a qualifying life event.

♦ Affordability will be based on the cost of coverage relative to your estimated household income for the coming year. To get an exemption for the entire calendar year, you must apply before the year starts.

Health insurance would be considered affordable to you if your employer offers a plan that costs less than 10.22% of your household income in 2027. This jumped from 9.96% for 2026. This is now at a significant historical high.

♦ This increase came about because of an executive memorandum issued by President Trump instructing federal agencies to deliver alternate forms of health coverage relief after Congress declined to extend the enhanced pandemic-era premium tax credits.

The administration changed the calculations to determine affordability, mathematically driving up the 2027 affordability exemption threshold.

Driving up the threshold would normally reduce the number of people who would qualify for a hardship exemptions. But the Trump administration introduced a Loophole to cancel out this higher restriction.

♦ The policy goal is to shift more people to low-premium, high-deductible options. To accomplish this while raising the affordability threshold, they had to recast the definition of a hardship exemption. They unlinked it from the math formula.

The administration declared that any consumer who is entirely ineligible for federal premium tax credits (APTC) or cost-sharing reductions (CSRs) faces an automatic "structural barrier" to care.

Because of this rule change, if you made over 250% FPL or under 100% FPL (and lack subsidies), the system considers your situation an automatic hardship.

So even though the 10.22% affordability threshold narrowed one path to a hardship exemption, the new structural definition vastly expanded the overall number of people who can bypass standard plans, especially higher-earning individuals over 400% FPL who can now self-attest to their income without paperwork.

Try not to confuse

The Premium Tax Credit also takes into consideration if a plan offered to you is affordable or not. Please read the detailed article titled: Affordable Coverage

Visit HealthCare.gov for a complete list of possible exemptions and application forms.