Both the Obama administration and states that run their own health insurance marketplaces are considering an extra enrollment period for tax filers who learn they owe a fine for not carrying insurance.
Youre going to hear from us, one way or another, within the next two weeks on whether thats something that we would do. Its an issue thats been raised, Health and Human Services Department Secretary Sylvia Mathews Burwell said at an event in Texas Feb. 13. She confirmed in a Wednesday video that HHS is considering adding the period, but an HHS spokesman says no decision has been reached.
On Monday, Washington state, which runs its exchange, said it would have a special enrollment window from Feb. 16 to April 17, and other major state-run exchanges said on a media call organized by Families USA to discuss 2015 enrollment that they too are considering an extension.
A new period would let people sign up as soon as they get a taste of the financial penalty that comes with not enrolling. Americans who didnt have insurance in 2014 may owe a fine of as much as 1% of their income. If they remain uncovered this year, the fine could rise to 2% of their income for the 2015 tax year. Income tax filings for 2014 are due April 15.
The Treasury Department has estimated as many as 6 million people may owe the penalty for not carrying insurance in 2014.
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When fully phased in, for tax year 2016, the penalty will be capped at the cost of the lowest cost bronze plan. The logic is you can pay the same amount of money, yet have health insurance, says Karen Pollitz, senior fellow at the non-partisan Kaiser Family Foundation.
Despite that, the biggest barrier to enrollment remains that people arent aware of coverage options. Theyve heard of the mandate, but what to do about it after that, there still are a lot of misinformed people out there, she says. A special enrollment period certainly could be an attention-getter and I think that is part of why people are discussing this.
It is still a pretty steep learning curve for the whole country, and April 15 may be another teachable moment, she adds.
In a letter to Burwell, 11 Democratic senators urged HHS to put in this enrollment period. Such a special enrollment period would increase coverage in affordable private health insurance and reduce the costs that the uninsured pass along to the insured, the senators wrote.
Ron Pollack, executive director of Families USA, said on the Wednesday call his organization has been in touch with HHS to urge a special enrollment period. A huge number of people are unaware [they] need to obtain health insurance to avoid a significant tax penalty, he says. As people learn about this, we believe they should be given the opportunity to enroll.
States
On the same call, exchange heads from California, New York and Kentucky all said they are considering the extra enrollment period. Californias Chris Lee says questions were raised about adverse selection, or people enrolling in health insurance not because of tax penalties but because they got sick. However, health plans that sell on Covered California told him the concern was unwarranted, according to their actuaries. That [is] a major factor going into consideration, he says. This is a special circumstance the first time Americans are seeing shared responsibility fees on their taxes.
For the first year ever, Americans can use that opportunity to enroll, Lee adds. Its the right, consumer-centric thing to do to give this very close consideration.
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Lee says so far California has seen thousands of consumers who literally walked across the street from the tax adviser, because they discovered they had a penalty, to then enroll. We think this is something we need to look at closely.
Additional reporting by Alex Wayne of Bloomberg
