CMS recently issued guidance to ensure that individuals who purchase insurance through the ACA Marketplace/Insurance Exchange near the end of the initial open enrollment period are not subject to a penalty for a break in insurance coverage. By way of background, beginning in 2014, the ACA requires every individual to maintain health coverage (known as minimum essential coverage), qualify for an exemption from the requirement to maintain minimum essential coverage (including an exemption for gaps in coverage of less than 3 months), or make a shared responsibility payment when filing a federal income tax return. For 2014, the shared responsibility payment/penalty equals the greater of 1% of annual income or $95 per person.
The initial open enrollment period in the Health Insurance Marketplace runs through March 31, 2014. Under the insurance enrollment rules, however, an individual who enrolls between February 16, 2014 and March 31, 2014 would have coverage effective as of April 1 or later – which could result in a break in coverage of 3 or more months and trigger the penalty if the individual does not qualify for another exemption. In guidance issued on October 28, 2013, CMS states that “HHS has determined that it would be unfair to require individuals in this situation to make a payment.” Consequently, HHS is establishing a “hardship exemption” from the shared responsibility payment if an individual enrolls in a plan through the Marketplace prior to the close of the initial open enrollment period. Additional detail will be provided in 2014 on how to claim this exemption.