QuickTake: As of December, Many Uninsured Adults Were Not Aware of Tax Penalties for Not Having Coverage, the Marketplaces, or the Open Enrollment Deadline

Michael Karpman, Genevieve M. Kenney, Sharon K. Long, and Stephen Zuckerman

February 19, 2015

Though the most recent health insurance Marketplace open enrollment period officially ended February 15, 2015, state and federal policymakers are considering a special enrollment period for uninsured individuals who find they are subject to the penalty for not having coverage in 2014 and have not yet enrolled in Marketplace coverage for 2015.1 An extended enrollment period would be expected to lead to more coverage among the remaining uninsured, many of whom could learn that they are subject to a penalty when they file their 2014 taxes and could be motivated to purchase coverage in order to avoid having to pay what would likely be an even higher penalty in 2016 for not having insurance in 2015 (Dorn 2015).2 Washington State has already extended open enrollment past the tax filing deadline to accommodate the uninsured who become aware of the penalty and had not previously enrolled in a Marketplace plan.3



We use data from the December 2014 round of the Urban Institute’s Health Reform Monitoring Survey (HRMS) to explore awareness of the penalty and the open enrollment deadline, as well as expectations for paying the penalty, among uninsured adults ages 18 to 64 with family incomes above 100 percent of the federal poverty level (FPL). We focus on uninsured adults with incomes above 100 percent of FPL because they are most likely to be subject to the penalty, in contrast to poor uninsured adults who would likely qualify for an exemption.4

Many nonpoor adults who were uninsured as of December 2014 had heard little or nothing about the penalty, were unaware of the February 15 deadline to obtain coverage through the Marketplaces, and did not know if they would be subject to a penalty for not having coverage in 2014.

More than 4 in 10 uninsured adults who may be subject to the penalty have heard little or nothing about it.

Among adults who were uninsured as of December 2014 and had family incomes above the federal poverty level, 19.3 percent had heard only a little about the penalty for not having coverage in 2014, and 24.8 percent had heard nothing at all about the penalty. Just over half (53.5 percent) had heard some or a lot about the penalty.

Most nonpoor uninsured adults do not think they will be subject to the penalty or do not know.

Only one-quarter (25.1 percent) of uninsured adults with incomes above 100 percent of FPL expected to pay the penalty for not having coverage in 2014. Four in 10 (40.5 percent) did not know if they would need to pay the penalty, and nearly 3 in 10 (27.9 percent) did not expect to pay the penalty. Though there are several ways to qualify for exemptions to the penalty, many uninsured adults in this income range will likely have to pay the fine.

Two-thirds of nonpoor uninsured adults do not know about the Marketplaces or the open enrollment deadline or think the deadline is in March.

About 3 in 10 (29.7 percent) uninsured adults with incomes above 100 percent of FPL reported not having heard about the Marketplaces, 28.7 percent had heard about the Marketplaces but did not know when open enrollment ended, and 6.9 percent had heard about the Marketplaces and thought the enrollment deadline was in March. Only 32.8 percent had heard about the Marketplaces and thought the deadline was in February or earlier. Other survey data show similarly low awareness of the open enrollment deadline among uninsured nonelderly adults (DiJulio, Firth, and Brodie 2014).

Most of those who were unaware of the penalty also appeared to be unfamiliar with the Marketplaces and the open enrollment deadline. Among uninsured adults with incomes above 100 percent of FPL who had heard only a little or nothing at all about the penalty, more than 80 percent had not heard about the Marketplaces, had heard about the Marketplaces but thought the open enrollment deadline was in March, or had heard about the Marketplaces but did not know when the open enrollment period would end (data not shown).

Though Marketplace enrollment has increased since December 2014,5 these results suggest that a special enrollment period could help a significant segment of the remaining uninsured who learn about the penalties when they file their 2014 tax returns.

References

ASPE (Assistant Secretary for Planning and Evaluation). 2014. Health Insurance Marketplace 2015 Open Enrollment Period: December Enrollment Report. Washington, DC: US Department of Health and Human Services.

DiJulio, Bianca, Jamie Firth, and Mollyann Brodie. 2014. Kaiser Health Policy Tracking Poll: December 2014. Menlo Park, CA: Kaiser Family Foundation.

Dorn, Stan. 2015. Enrollment Periods in 2015 and Beyond. Washington, DC: Urban Institute.

About the Series

This QuickTake is part of a series drawing on the HRMS, a quarterly survey of the nonelderly population that explores the value of cutting-edge Internet-based survey methods to monitor the Affordable Care Act before data from federal government surveys are available. Funding for the core HRMS is provided by the Robert Wood Johnson Foundation and the Urban Institute.

For more information on the HRMS and for other QuickTakes in this series, visit www.urban.org/hrms.

Notes

1 Robert Pear, “Senate Democrats Lobby for a Reprieve for Some Who Failed to Get Insurance,” New York Times, February 16, 2015; Louise Radnofsky and Stephanie Armour, “Health Exchanges Extend Deadlines for Insurance Sign-Ups,” Wall Street Journal, February 16, 2015; Jason Millman, “Democrats Are Bracing for Another Obamacare Backlash,” Washington Post, February 17, 2015; and Margot Sanger-Katz, “Enrollment Period for Health Insurance Ends; Now the Tax Penalties Start,” New York Times, February 17, 2015.

2 The penalty for each adult who did not have coverage in 2014 is the greater of 1 percent of income or $95. The penalty increases to the greater of 2 percent of income or $325 for adults who do not have coverage in 2015. See http://taxpolicycenter.org/taxfacts/acacalculator.cfm.

3 Radnofsky and Armour, “Health Exchanges Extend Deadlines.”

4 In addition to the exemption for those with incomes below the tax filing threshold, individuals can qualify for other exemptions to the penalty, including a wide range of hardship exemptions. The list of exemptions is available at “Exemptions from the fee for not having coverage,” US Centers for Medicare and Medicaid Services, accessed February 17, 2015.

5 In a video posted on Facebook, the White House announced preliminary estimates that 11.4 million people had enrolled or reenrolled in health plans through the federal and state Marketplaces during the second open enrollment period. An earlier report indicated that as of December 15, when most HRMS respondents had completed the December round of the survey, more than 4 million had enrolled or reenrolled in coverage through the federal and state Marketplaces (ASPE 2014).