Politicians from both sides of the aisle are rushing to announce their support for delay of the individual mandate—an incredible change from just two short weeks ago. Last night, Twitter lit up with dozens of stories from journalists claiming that the White House was moving to join the chorus by delaying the individual mandate by six weeks. Sadly, the news was simply nothing more than a technical clarification.
HealthCare.gov’s problems are widespread and well-known at this point. The Exchanges can’t seem to do anything right. The website fails to accurate report Medicaid data to states, provide correct pricing and subsidy information, and send complete information to insurers. Most insiders suggest the White House has until Thanksgiving to fix the issues so individuals can purchase insurance ahead of the January 1, 2014 launch date.
Individuals must purchase insurance coverage in 2014 to avoid the mandate penalty of $95 or 1 percent of income, whichever is great. The law gives individuals a one month pass, but says that failing to secure coverage for three separate months, like January, February and March, would trigger the fine. This creates a functional three-month grace period—through March 31, 2014—to be insured.
This grace period runs concurrently to HealthCare.gov’s open-enrollment period, which started on October 1st, and ends on March 31, 2014.
But even if the website is working, individuals could be subject to unnecessary penalties due to the twisted rules of ObamaCare. On October 8, 2013, Jackson Hewitt, a tax firm, highlighted a weird quirk. Individuals could buy insurance in March during the open enrollment period, but still be hit by the individual mandate penalty, creating a nightmare for hardworking families looking to meet the harsh demands of ObamaCare.
How could that be?
The answer, like so many other things in health care policy, relates back to the unique nature of health insurance.
Traditionally, insurance policies start coverage on the first of every month. A policy sold on March 2, 2014 and March 25, 2014 would both start on April 1, 2014. Policies also generally require a 10-15 day lead time due to paperwork—which unless HealthCare.gov straights out its hiccups could feasibly be longer. This means a policy providing coverage by March 31, 2014 would need to be purchased by February 15, 2014, functionally eliminating the last six weeks of the open-enrollment period.
On Monday, during his daily White House briefing, Press Secretary Jay Carney announced that the Department of Health and Human Services (HHS) would be releasing guidance clarifying that the White House will not enforce the individual mandate penalty on individuals that buy insurance from February 16th until March 31st, even if the policy is not yet in effect.
All Carney’s statement and the associated technical guidance does is align the open-enrollment period of HHS with the grace-period on the mandate penalty of the IRS.
As pressure from HealthCare.gov’s failures mount on President Obama and Democrats, delay of the individual mandate is still possible. This news from the White House isn’t it.
Nicole Kaeding is the state policy manager for Americans for Prosperity.