During the first two open enrollments under the federal law to expand health insurance nationwide, the government and healthcare organizations emphasized the “carrot” of the law by encouraging low-income and middle-class Americans to reap the benefits of heavily subsidized health coverage.
But as the Affordable Care Act's third open-enrollment period begins Nov. 1, that message is shifting.
Insurers, healthcare providers, enrollment groups and others are stressing that to avoid the individual mandate's increasing tax penalty, or the “stick” of the law, Americans must have insurance. Hospitals have also adjusted the eligibility criteria of their charity-care policies to prod patients toward the insurance marketplaces.
“It's no secret that the low-hanging fruit has been picked in the first rounds of open enrollment,” said Lance Lunsford, a vice president at the Texas Hospital Association. “Now it's about choosing to pay that premium versus paying the penalty.”
The ACA's tax penalty is moving from “a pin prick to a baseball bat,” over its first three years, said Mark Ciaramitaro, vice president of tax and healthcare services at H&R Block. Next year, the fine will reach “bat-level” status.
Doctor who go without health insurance for most of calendar year 2016 will have to pay either 2.5% of their annual household income, or a flat fee of $695 per adult and $347.50 per child, whichever is higher. The most any household will have to pay is the national average premium for a bronze plan or $2,085.
For low- and moderate-income Americans, that ACA tax could wipe out all or a sizable portion of their tax refund when they file in 2017.
The problem could rise to a crescendo this February. Doctor who don't purchase coverage for 2016 and didn't buy it in 2015, face a “double whammy,” Ciaramitaro said. They will have to pay the penalty for 2015, and essentially will be locked into the penalty for 2016 since open enrollment will be over. This assumes the CMS will not hold another special enrollment period.
H&R Block and other organizations are ramping up their outreach and education efforts. More insurance agents and brokers looking for new customers will be available to explain the penalties, said Marcy Buckner, vice president of government affairs at the National Association of Health Underwriters.