Q. I understand that I won't have to pay a penalty for not having insurance because I signed up for coverage before the end of open enrollment. But what about my kids? Their CHIP coverage didn’t start until April.
A. As long you signed them up before the end of the open enrollment period—March 31 in most cases, although it was extended for some people into April—you shouldn’t owe a penalty for your kids. The Department of Health and Human Services made that clear in guidance it released recently.
In the CHIP program, coverage doesn’t necessarily become effective immediately when someone applies. The problem that needed to be addressed was that people who applied for and were found eligible for Medicaid or CHIP during open enrollment this year might be uninsured for three months or more if their coverage didn’t start until April 1 or later. Under the health law, a coverage gap of that length could open them up to a penalty for not having insurance.
Applicants for private coverage on the health marketplaces had faced the same timing problem: If they applied for a plan after Feb. 15, their coverage wouldn’t become effective until at least April 1, potentially leaving them with a coverage gap longer than the “less than three months” allowed under the law.
Last October, HHS clarified that anyone who applied for coverage through the health insurance marketplace during the open enrollment period wouldn’t be subject to the penalty for not having insurance. But the guidance didn’t spell out whether the same rules applied to people who signed up for Medicaid or CHIP during open enrollment. This new information makes it clear that it does.
“People may not have realized that they would face a penalty,” says Brian Haile, senior vice president at Jackson Hewitt Tax Service. “By being proactive, HHS avoided compounding people’s frustration.”