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THE MUSINGS OF A TRADITIONAL SOUTHERN DEMOCRAT

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Sid in his law office where he sits when meeting with clients. Observant eyes will notice the statuette of one of Sid's favorite Democrats.

Saturday, March 21, 2015

Many Uninsured Choose Penalty Over Enrollment Offer Under Health Law - Tax preparers and survey find tepid response to Obama administration effort to boost sign-ups

From The Wall Street Journal:

WASHINGTON—A special enrollment period to obtain health insurance for millions of uninsured people who owe a tax penalty under the Affordable Care Act is off to a slow start.

The health law requires most Americans to have insurance or pay a fine at tax time. The open enrollment period under the health law ended Feb. 15, but the Obama administration said it would allow people who discover they owe a fine to sign up for coverage through April, at the end of the tax season.

Major tax-preparation firms say many customers are paying the penalty and not getting health insurance. It is still early, since the special enrollment period launched Sunday, but research also suggests that many people who lack health insurance will pay the penalty and not get covered this year.
Only 12% of uninsured people would buy policies if informed of the penalty, according to a survey of 3,000 adults polled through Feb. 24 by McKinsey & Co.’s Center for U.S. Health System Reform.

At H&R Block Inc., “our analysis indicates that a significant percentage of taxpayers whose household members were not covered for at least a portion of 2014 are opting” to pay the penalty, said Mark Ciaramitaro, a vice president of health-care enrollment services at the tax-preparation firm.

Richard Gonzalez, 59 years old, of Navarre, Fla., found out he will pay a $250 penalty for going without insurance. The retired employee of United Parcel Service Inc. said he won’t take advantage of the special enrollment period because it is cheaper for him to pay out-of-pocket for health care than to buy insurance on the exchange. He said he shopped on the exchange but would have to pay $400 a month for a plan with a $6,000 deductible.

“I think it’s wrong I have to pay the penalty,” said Mr. Gonzalez. “But it beats paying more than $10,000 a year.”

Lackluster sign-ups during the special period mean the Obama administration may only get a small enrollment boost. About 11.7 million people have already signed up on state and federal exchanges this year, though not all of them have yet paid premiums.

The special enrollment period applies to people who have to pay a penalty for going without coverage in 2014 and also face a penalty in 2015. They must pay any penalty they owe for not having coverage but can use the special enrollment period to obtain coverage and not generate any more fines.

Those who were uninsured in 2014 face penalties of $95, or 1% of their income—whichever is higher—when they file taxes this year. Fines will grow to $325, or 2% of income, for 2015, though millions of people qualify for exemptions.

Those with insurance through the exchanges might find another unpleasant surprise: As many as half the nearly 7 million Americans who got subsidies to offset their premiums may have to refund money to the government, according to an estimate by H&R Block. The subsidies are based on consumers’ own projections of their 2014 income, but some estimated incorrectly and received overly generous credits. Those people will see smaller-than-expected refunds or could owe the government money.

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