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People Who Didn't Comply With Health Law Mandate to Get Grace Period

By Rebecca Adams, CQ Roll Call

February 20, 2015 --- The Obama administration will give as many as 6 million people who didn't comply with the health law's individual mandate in 2014 almost seven more weeks to buy health insurance this year before they face a tax penalty.

Department of Health and Human Services officials said late last week that they would create a special enrollment period, from March 15 to April 30, for people to comply with the law's requirement that most individuals have health coverage. A regular open enrollment period lapsed on Feb. 15, although people who did not finish applications have until Feb. 22 to complete them.

The fee for individuals who didn't have coverage in 2014 is the greater of 1 percent of the person's annual household income or $95 per person. Penalties increase every year: in 2015, it's the higher of 2 percent of annual household income or $325 per person.

It's unclear how many people who didn't comply with the mandate have since purchased coverage or claimed one of a series of hardship exemptions. The recently announced grace period gives those individuals another chance to enroll but does not lift the penalty for failing to obtain coverage in either 2014 or 2015. 

Administration officials also acknowledged that they sent 800,000 tax filers, which could mean more than 1 million individuals, incorrect information in January about the health insurance subsidies that they received last year, which would affect their tax refunds. HHS will send out corrected forms in early March.

Only about 5 percent of the people who got incorrect information have filed their taxes already. Those taxpayers will get new instructions from the Treasury Department about how to correct their returns and, in some cases, pay higher taxes or get additional refunds as a result. 

Andy Slavitt, the principal deputy administrator of the Centers for Medicare and Medicaid Services, told reporters that the administration doesn't know how the mistake occurred. The error affected about 20 percent of the people who got a new tax document, the 1095A form, showing that they received a federal subsidy in 2014 that discounted the cost of coverage purchased through marketplaces created under the health law.

Slavitt said that federal officials have begun calling and emailing consumers who are affected. The administration is asking people to wait to send in their taxes until after they get corrected forms. The problem is linked to a local premium rate that is used in the government's formula to calculate consumers' subsidies.

The new enrollment opportunity is a one-time-only additional chance for people who will have to pay a tax penalty this year. But it is only one of several ways that people can get covered now that the Feb. 15 deadline has passed. People can enroll in marketplace coverage if they move, switch jobs, have a change in their family size, or experience other changes.

Many of the 6 million people who face a penalty can also still select from a long list of hardship exemptions. Slavitt said that federal officials are adding a new tool on the federal enrollment website to help people figure out if they qualify.

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