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Individuals and families who were not aware of the tax implications of not having insurance will have an opportunity to obtain coverage during a special enrollment period.
The Centers for Medicare and Medicaid Services (CMS) announced on February 20 a special enrollment period (SEP) for individuals and families who did not have health coverage in 2014 and are subject to the fee or “shared responsibility payment” on their 2014 taxes in states which use the federally-facilitated marketplaces (FFM).
This special enrollment period will allow those individuals and families who were unaware or didn’t understand the implications of this new requirement to enroll in 2015 health insurance coverage through the FFM.
“This is really more of a political decision than anything else,” according to Miles Varn, MD, chief medical officer at PinnacleCare. “I don't believe that filing a tax return is going to prompt this group to suddenly sign up for coverage. They have ignored it so far and will continue to ignore it until the penalty is significant. As it stands the penalty is much less expensive than coverage in an annual basis even if you factor in a subsidy. I don’t believe that manage care or providers are going to do much more than simply yawn.”
For those who were unaware or didn’t understand the implications of the fee for not enrolling in coverage, CMS will provide consumers with an opportunity to purchase health insurance coverage from March 15 to April 30. If consumers do not purchase coverage for 2015 during this special enrollment period, they may have to pay a fee when they file their 2015 income taxes.
According to recent Obama administration projections, up to 6 million Americans are expected to pay a penalty for not having coverage in 2014. Most qualify for an exemption, either related to their inability to afford coverage or some other hardship, and won't face the penalty.
Those eligible for this special enrollment period live in states with a federally-facilitated marketplace and:
The special enrollment period will begin March 15, 2015 and end at 11:59 pm E.S.T. on April 30, 2015. If a consumer enrolls in coverage before the 15th of the month, coverage will be effective on the first day of the following month.
For the first time individuals and families will be asked to provide basic information regarding their health coverage on their tax returns. Those who could not afford coverage or met other conditions may be eligible to receive an exemption for 2014. To help consumers who did not have insurance last year determine if they qualify for an exemption, CMS also launched a health coverage tax exemption tool today on HealthCare.gov and CuidadodeSalud.gov.
About three quarters of taxpayers will only need to check a box when they file their taxes to indicate that they had health coverage in 2014 through their employer, Medicare, Medicaid, veterans care or other qualified health coverage that qualifies as “minimum essential coverage.” Remaining taxpayers, about one-quarter, will take different steps.
It is expected that 10% to 20% of taxpayers who were uninsured for all or part of 2014 will qualify for an exemption from the requirement to have coverage. An estimated 2% to 4%, will pay a fee because they made a choice to not obtain coverage and are not eligible for an exemption.
Americans who do not qualify for an exemption and went without health coverage in 2014 will have to pay a fee: $95 per adult or 1% of their income, whichever is greater, when they file their taxes this year. The fee increases to $325 per adult or 2% of income for 2015. Individuals taking advantage of this special enrollment period will still owe a fee for the months they were uninsured and did not receive an exemption in 2014 and 2015. This special enrollment period is designed to allow such individuals the opportunity to get covered for the remainder of the year and avoid additional fees for 2015.