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Administration Weighs Relief for Taxpayers Who Lacked Coverage in 2014

By Rebecca Adams, CQ Roll Call

February 18, 2015 -- The federal government and a number of states that enroll people for health insurance are under increasing pressure to give people facing a tax penalty for not buying plans last year another chance to get covered. Health and Human Services Secretary Sylvia Mathews Burwell reiterated at a recent press conference that federal officials will decide in the next two weeks whether to re-open enrollment for such individuals.

"We will be back quickly on it," Burwell said.

At the wide-ranging news conference, Burwell said the health care law (PL 111-148, PL 111-152) "is changing lives" but declined to say whether she is worried about a forthcoming Supreme Court case that will decide the legality of giving subsidies to people in the 34 states that rely on the federal government to run their marketplaces. Burwell reiterated that the Obama administration's position is that Congress intended people in every state to get subsidies but declined to elaborate.

The deadline for signing up for health care coverage through was Feb. 15, although the federal government is allowing people who didn't finish applications an extra week. Burwell recently said that includes about 150,000 people who had phoned call centers but had not completed their applications. Another unknown number of people also have until Feb. 22 to enroll if they say they faced technical problems.

About 11.4 million people enrolled or were automatically renewed in coverage through Feb. 15, with more than 1 million signing up in the final week before Feb. 15. However, about 200,000 people will lose their coverage because they didn't send in enough documentation to prove they are legal residents or citizens.

Most states also extended the Feb. 15 deadline, with the majority allowing sign-ups through the end of February. Washington state is giving people who faced technical problems until April 17 to complete their applications or pay premiums, said Richard K. Onizuka, the CEO of the Washington Health Benefit Exchange, on a call with reporters last week.

Last week, Minnesota announced it would give people who have to pay a penalty for failing to get covered last year one more chance to enroll through a special enrollment period from March 1 through April 30.

The directors of several other insurance exchanges–including those in California, Kentucky, and New York–said they are considering a similar opportunity. Those directors said that many people who signed up for coverage recently did so because they heard that they would be fined if they don't have insurance. People who didn't get coverage last year will have to pay $95 or 1 percent of their income, whichever is more, when they file taxes by April 15. The penalty goes up to $325 per person or 2 percent of income if people aren't covered this year.   

Ron Pollack, the director of the advocacy group Families USA and an ally of the Obama administration, told reporters that the group is pushing federal officials to allow a special sign-up period for people who face fines. He said that although government officials and advocates have publicized the penalty, millions of uninsured people still are not aware of the fines or the subsidies that could help many of them afford coverage.

"It's in all our interests to get as many people enrolled as possible," Pollack said, adding that any special sign-up opportunity would be a "limited period" that would not motivate a large number of sick people to enroll, which could drive up premiums for people who buy private health insurance on their own through the marketplace.

New York  Health Benefit Exchange Director Donna Frescatore noted on a call with reporters that some people will still face penalties even if they take advantage of another chance to get covered. The penalties are triggered when people go three months or more without coverage. If an uninsured person signed up in early March, the person's insurance would take effect on April 1.

California state officials asked insurers whether allowing people facing penalties to enroll would disrupt the market or cause premiums to go up. Health plans "were not concerned," said Peter Lee, the director of the Covered California exchange. "That's a major factor going into our considerations . . . I think it's the right consumer-centric thing to do to give this very close consideration."

Lee also said that in future years, he expects the official open enrollment periods to be less important because a growing number of people will have insurance. After the open enrollment deadlines pass, people can also get covered if their personal circumstances change in a number of ways—such as if their family size changes, they lose their insurance, or they move. Those opportunities will take on increased significance in future years, Lee predicted.

"We're now moving into a new world in which health care coverage every month is something people have available" if their circumstances change, said Lee.

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