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.

A woman looks at the HealthCare.gov insurance exchange internet site October 1, 2013 in Washington, DC.
National Journal
Catherine Hollander
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Catherine Hollander
Oct. 22, 2013, 9:13 a.m.

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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