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Health Care

Website Flaws Might Exempt Some from Obamacare Penalties

White House spokesman won't answer directly but the law gives HHS broad discretion decide what factors may apply in considering the exemption.

(KAREN BLEIER/AFP/Getty Images)

White House Press Secretary Jay Carney says that Obamacare won't financially penalize Americans who "do not have access" to affordable health coverage by the March 31 deadline for obtaining it.

Carney repeated a version of the following statement multiple times in Monday's briefing with reporters: "As written, the law makes clear that people who do not have access to affordable care due to a state not expanding Medicaid or other factors will not be penalized."

He declined to clarify whether the glitches plaguing HealthCare.gov, home of the federal insurance marketplace, qualify as "other factors." But the law gives the Health and Human Services secretary broad discretion to decide what those factors are, and wouldn't prevent her from counting inability to sign up online among them.

 

Currently, the Affordable Care Act offers exceptions to the penalty for religious reasons, incarceration and for being a member of a federally recognized tribe. (The IRS has a more complete list here).

HHS has also outlined a number of separate hardship exemptions. These include, but aren't limited to, homelessness, the recent death of a close family member, and, as Carney mentioned, residence in a state that fails to expand Medicaid to 138 percent of the federal poverty line for people who would have been eligible if they lived in a state that did.

The Congressional Budget Office estimates that 24 million Americans will qualify for these exemptions by 2016.

And not being able to access the HealthCare.gov website to sign up for coverage could be added to the list of hardship exemptions, if the HHS secretary decided to do so. "The hardship exception is open-ended. The secretary can define hardship," says Washington and Lee University law professor Tim Jost.

Asked whether, if the technical troubles continue, there could be an issue with individuals meeting the mandate before the penalty begins, Carney said HHS is "working on aligning those policies, the enrollment period and the individual responsibility timeframe period, and they'll issue guidance soon." HHS had not responded to an e-mailed request for comment at the time of publication.

The administration has emphasized that the website is not the only way to sign up for coverage. Individuals still have the option of buying insurance in person or over the phone, which Obama touted in a Monday Rose Garden appearance for which he has been compared to an infomercial salesman.

"The phone number for these call centers is 1-800-318-2596," he said. "I want to repeat that: 1-800-318-2596. Wait times have averaged less than one minute so far on the call centers."

How long it will take to fix HealthCare.gov is not clear at this time.

There are some "wrinkles" with using website troubles as a qualifier for the hardship exemption, Nicholas Bagley, a University of Michigan law professor, and Austin Frakt, a health economist at the U.S. Department of Veterans Affairs, point out in a Bloomberg editorial they co-authored. The exchanges are supposed to process hardship exemption applications; that's complicated if the websites aren't working. But Sebelius can draft a rule that would instruct the broken exchanges to issue blanket hardship exemptions to all the uninsured in their states, waiving the penalty for everyone unable to purchase through the busted websites, they say.

Americans who can afford health insurance and choose not to buy it, and don't qualify for one of the exemptions outlined by HHS, will face penalties ("individual shared responsibility payments," in gov-speak) starting in 2014. The penalty next year for not obtaining coverage is $95 per person, or 1 percent of income, whichever is greater; the amount climbs to $695 and 2.5 percent of income by 2016. The administration is relying on participation in the health-insurance exchanges of a broad swath of the population, not just the sick and elderly, to keep costs down.

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