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Trump administration seeks new ways to allow people to dodge Obamacare’s individual mandate

The website. The Centers for Medicare and Medicaid Services is exploring guidance to exempt more people from the Affordable Care Act’s individual mandate. (Associated Press)

The Trump administration is exploring ways to excuse more Americans from the requirement that they prove they’re insured in the remaining months before the Affordable Care Act’s individual mandate is laid to rest.

The Centers for Medicare and Medicaid Services is working on guidance expanding the “hardship” exemptions from the 2010 health-care law’s mandate that people purchase health plans, according to two people familiar with the effort. Agency officials haven’t yet finalized the guidance, but aim to increase the number of reasons people could cite as justifications for not showing they’re insured when they file their tax returns.

The administration’s expected move comes as Republicans’ legislative efforts to repeal the 2010 law, known as Obamacare, and replace it with a new system has stalled. Instead, Trump administration officials are increasingly turning to executive actions and regulations to weaken the ACA, including cutting off billions in federal reimbursements insurers receive for lower-income customers, shrinking the annual enrollment period and scaling back federal money to promote sign-ups under the law.

Congressional Republicans and President Trump repealed the individual mandate in their tax overhaul that passed last year. But the requirement to purchase coverage doesn’t end until 2019. The additional exemptions would apply to the current year, meaning they could be cited by filers preparing their 2018 taxes next year.

“I have always said we should be focused on providing the families trapped in Obamacare with as much relief as possible — as soon as possible,” said Rep. Peter J. Roskam (R-Ill.) in a statement.  “The Administration’s decision to broaden the hardship exemption will deliver much-needed relief” from the mandate.

The Health and Human Services Department, which oversees CMS, declined to comment on the guidance Wednesday.

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The ACA requires most Americans to buy health insurance or pay a penalty. But during the Obama administration, federal agencies defined multiple circumstances in which people could be excused from that requirement. For example, people can qualify for a hardship exemption if they experienced a serious financial difficulty such as eviction or filing for bankruptcy — or a personal difficulty such as domestic violence or the death of a family member.

The current penalty for not having health coverage is $695 per adult and $347.50 per child — up to $2,085 per family — or 2.5 percent of family income, whichever is greater. About 6.5 million taxpayers paid a fine for being uninsured in 2015, according to the Internal Revenue Service, although the fine that year was $470 per adult.

While congressional Republicans back the idea of the administration taking executive action to scale back the individual mandate, Democrats were quick to criticize it.

“This appears to be yet another step by the Trump administration to undermine health care markets, which means higher premiums for families and those who need health care the most,” said Sen. Ron Wyden (Ore.), the top Democrat on the Finance Committee.

Josh Peck, co-founder of Get America Covered, questioned what other kinds of circumstances would justify letting taxpayers off the hook for not buying health insurance. He said that while he was working at CMS under Barack Obama, the agency had thoroughly explored the extent to which exemptions were needed.

“The previous administration looked very closely at the hardship exemption to make sure it was serving the people who needed the exemption,” Peck said.

Peck added that he’s “pretty skeptical” of what the additional exemptions might be, but said he would need to see specifics before weighing in further.

It’s unclear when CMS might finalize the additional guidance. People within the agency said it was putting several items on hold until the confirmation of Alex Azar as HHS secretary. He was confirmed by the Senate Wednesday is a 55 to 43 vote.

Michael S. Adelberg, a principal at Faegre Baker Daniels Consulting specializing in health care, said that because the health care law does not define what constitutes a hardship exemption, “the administration has wide discretion, but big changes to the definition might require new regulation. New regulations take time and require public comment.”

Even without more hardship exemptions, it was already going to be relatively easy for Americans to duck the individual mandate this year. The IRS had already backed away from a previously planned enforcement increase, announcing in February that it would not withhold tax refunds even if filers hadn’t provided information about whether they had coverage in the previous year.

Under former President Barack Obama’s administration, the IRS had processed tax returns even if filers failed to answer the required questions about whether they had health coverage. The agency had planned to start rejecting such returns in 2017, but reverted back to the original policy shortly after Trump took office.

But the move to expand exemptions could give Republicans additional political ammunition to make the case they have eased an unpopular requirement imposed on the American public, as they contended after passing their tax overhaul in December. Polls have regularly shown that the mandate is the least-popular part of the ACA. Fifty-five percent of voters overall and 73 percent of Republican voters supported repealing the mandate in a November Kaiser Family Foundation survey.