The U.S. Department of Health and Human Services’ (HHS) Notice of Benefit and Payment Parameters for 2027 expands hardship exemption eligibility to individuals ineligible for advance payments of the premium tax credit or cost-sharing reductions because their projected household income is below 100% or above 250% of the federal poverty level. The final rule takes effect on July 20, 2026.
Background
Catastrophic health plans are specialized plans, sold in the individual market. They offer low premiums and high deductibles to protect against very high medical costs. They are available only to individuals under age 30 or those who qualify for an affordability or hardship exemption.
Prior Guidance
On September 4, 2025, HHS issued hardship exemption guidance to help consumers manage expected 2026 premium increases. Starting November 1, 2025, individuals could apply online through HealthCare.gov or a certified partner, or by mailing a paper application.
This guidance applied to individuals in Federally-facilitated Exchange (FFE) states and in states using the FFE for exemptions, but not to California, Connecticut, Maryland, or the District of Columbia.
Related Developments
Effective January 1, 2026, all individual market bronze and catastrophic plans are health savings account (HSA) compatible high deductible health plans, allowing eligible enrollees, including those using the expanded hardship exemption, to open and contribute to an HSA.
Final Rule
HHS’ final rule extends hardship exemption eligibility nationwide including California, Connecticut, Maryland, and D.C. so any qualifying individual may enroll in catastrophic coverage, if otherwise eligible.
The final rule also permits catastrophic plans to run for up to 10 consecutive years, with eligibility locked in at enrollment. For more information, see HHS’ Notice of Benefit and Payment Parameters for 2027 Final Rule Fact Sheet. Download the bulletin for more details.
