Health care reform requires virtually all Americans to maintain health insurance beginning in 2014 or pay a penalty. The penalty is the greater of
- In 2014, $95 per uninsured person or 1 percent of household income,
- In 2015, $325 per uninsured person or 2 percent of household income, and
- In 2016 and beyond, $695 per uninsured person or 2.5 percent of household income.
The penalty applies if a person does not have health coverage for more than 3 months in a row.
The government announced last week that it will give people who purchase insurance through the Exchanges an extra 6 weeks to buy coverage. This means that people who purchase coverage through the Exchange will have until March 31, 2014 to sign up for a plan and avoid the non-insurance penalty.
Interestingly, this additional time is not due to the technological problems with the Exchange website. Instead, the change is due to timing inconsistencies with the open enrollment period under the Exchanges and the effective date of Exchange coverage. Open enrollment for coverage through the Exchanges began October 1, 2013 and is scheduled to end March 31, 2014. If someone enrolled by the end of the open enrollment period, they would not necessarily have coverage by April 1, 2014 which would be necessary to avoid a penalty. It will take a few weeks for coverage purchased through the Exchange to be effective, so someone who enrolled on March 31, 2014 would not have coverage effective April 1.
The administration clarified that anyone who purchases coverage through the Exchange by March 31, 2014 will not be subject to a penalty, even if that coverage is not in place on April 1, 2014.
Many are hoping for an even longer delay of the individual mandate penalty, due, in part, to the technical issues surrounding enrolling for health coverage through the Exchange.
