Hardship Exemption

A hardship exemption is an official determination that circumstances beyond your control prevented you from getting health coverage. Its main practical use today is unlocking access to Catastrophic plans, which are otherwise limited to people under 30.

Circumstances that have historically qualified include homelessness, eviction or foreclosure, domestic violence, the death of a close family member, a natural disaster affecting your property, filing for bankruptcy, substantial medical debt, or the unexpected cost of caring for an ill family member.

Because the federal individual mandate penalty was reduced to zero in 2019, an exemption is no longer needed to avoid a tax penalty at the federal level. A handful of states run their own individual mandates with separate exemption processes, so check your state's rules if you live in one of them.

The reason the exemption still matters is plan access. Catastrophic plans carry very low premiums and a deductible set at the full out-of-pocket maximum, with free preventive care and three primary care visits covered before the deductible. For 2026, eligibility was expanded so that people who do not qualify for premium tax credits or cost-sharing reductions may also apply for a hardship exemption to enroll regardless of age.

Two things to weigh carefully. Catastrophic plans are not eligible for Premium Tax Credits, so if you qualify for a subsidy, a Bronze or Silver plan is usually the stronger financial choice. And the deductible is very high by design.

Whether the expanded eligibility carries into the 2027 plan year should be confirmed against current CMS guidance before you rely on it. Call us at (305) 330-1277 and we can check your situation.