The Obamacare window technically just closed this weekend, but a new round of political headaches could just be beginning for the administration.
That's because it's tax season, and many Americans could soon be getting an unwelcome surprise that they owe the government a penalty for skipping health insurance coverage.
Up to 6 million Americans are expected to pay a penalty for not having coverage in 2014, according to recent Obama administration projections. The 2014 penalty for this tax season is $95, or 1 percent of family income — purposefully on the weaker side to let people adjust to this new coverage scheme. Most of the uninsured won't actually face the penalty because they'll qualify for an exemption, either related to their inability to afford coverage or some other hardship.
But it's likely that a lot of people who will have to pay don't know it yet. Despite the unpopularity of the individual mandate and the high-stakes Supreme Court case over it three years ago, there's still limited awareness of the penalty among those who could risk triggering it. Nearly half of uninsured Americans weren't aware of the penalty, and almost as many don't realize the law offers financial help to purchase coverage, according to a Harris Poll survey in the fall.
That means millions of people won't learn they'll have to pay the penalty until they file taxes this year, and at that point, it will have been too late to buy 2015 coverage since the enrollment deadline was Feb. 15. The minimum individual mandate penalty more than triples this year, rising to $325, or to 2 percent of income.
"It's the fact that if you didn't apply by Feb. 15, you have no way of escaping the penalty in 2015," said Stan Dorn, a senior fellow at the Urban Institute. "It's not something that a lot of people have necessarily thought through."
To head off the potential backlash, Democratic lawmakers and groups supporting the health-care law in the past few days have urged the administration to keep the enrollment period open for people who won't figure out they owe a penalty until it's too late.
The whole point of having defined enrollment periods in the Affordable Care Act is to discourage people — who can no longer be denied coverage because of pre-existing medical condition — from waiting until they get sick to purchase coverage. Allowing that would make the individual markets less healthy financially and boost costs for those who have coverage. So the law requires an annual enrollment window, and people run the risk of facing the penalty if they don't get purchase coverage.
Dorn, who recently wrote a paper making the case for a special enrollment window for those facing the penalty, said he doesn't think a two-month extension would hurt the functioning of the insurance system. Health insurance officials, who are already starting to prepare 2016 health plans, say they want to make sure a special enrollment period — if one is approved — would be defined specifically enough so only those facing the penalty would be eligible to enroll in coverage.
The administration seems to be exploring the idea of extending the enrollment period for those dinged by the individual mandate. “You’re going to hear from us, one way or another, within the next two weeks on whether that’s something that we would do,” Health and Human Services Secretary Sylvia Mathews Burwell said Friday, according to Bloomberg.
Meanwhile, the administration and states running their own insurance marketplaces have already made some accommodations to extend the enrollment period for some. People who had already started an application on HealthCare.gov but weren't able to complete it by the Feb. 15 deadline have until this Sunday to enroll and avoid the 2015 individual mandate penalty. All but one of the 13 states (plus the District of Columbia) running their own exchanges have offered some sort of extension beyond the Feb. 15 enrollment window, according to Charles Gaba of ACAsignups.net.
The most generous of these extensions comes from Washington state, which created a two-month special enrollment period for people facing the penalty. "This is the first year that residents may incur a tax penalty for not having health insurance under the Affordable Care Act," Richard Onizuka, chief executive of the Washington exchange, explained in a statement.
At the same time, Obamacare advocates have also been pushing the administration to schedule future enrollment periods to better coincide with tax season instead of the holiday season. They argue consumers will have more disposable income when they get a tax return, and the threat of the individual mandate penalty could spur more healthy people to sign up for coverage instead of paying the fine. The administration, however, has indicated that future ACA enrollment periods will likely run from October to mid-December.