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Thursday, February 19, 2015

Motivated by Tax Penalty, Consumers Flock to Health Insurance Exchanges

Talia Schmidt


The second open enrollment period in the health insurance marketplaces is officially closed. But and several state marketplaces are still accepting applications for coverage. These include California, Kentucky, New York, and Washington State—the four states participating in our final open enrollment teleconference call yesterday. The directors from these state-based marketplaces explained that the extensions are only for consumers who recently started an application to get health coverage but were not able to finish

The next big issue state marketplace directors are facing is whether to create a special enrollment period during tax season. As consumers begin filing their taxes, many are learning that they owe a penalty for not having health coverage in 2014. Families USA and other groups have urged officials to create a special enrollment period for these consumers so that they can get covered for 2015 and avoid a second penalty. 

“Millions upon millions of people are unaware about these penalties,” Ron Pollack, Families USA’s Executive Director, said.

Tax penalty boosted enrollment in final days 

Covered California’s Executive Director, Peter Lee, noted that tax time is an opportunity for many consumers to learn both about the opportunity to enroll in health coverage and the availability of financial help. He shared that the tax penalty had a direct impact in the last few weeks of open enrollment.

“One of the reasons we had substantial enrollment toward the end [of this open enrollment period] was because people were discovering they had to pay a penalty on their taxes,” Lee said. 

He added that many consumers were learning this information, leaving their tax preparer’s office, and walking across the street to an enrollment center to get covered. 

“This is the first time in history that taxes and health coverage intertwined,” said Lee. 

Kentucky, New York, and Washington all saw surges in their open enrollment numbers in the final days, in large part because of the penalty tax. Carrie Banahan of Kentucky’s health exchange said that they saw 2,000 people choose qualified health plans each week throughout open enrollment, but in the last week, they saw 6,000. And Donna Frescatore of New York Health Benefit Exchange said February 15 was the busiest day of enrollment. 

Enrollment assistance centers’ extended hours pay off

In the final week of open enrollment, many states extended the hours of their assistance centers to accommodate more consumers. 

Kentucky typically got 1,200 calls on Saturdays, but the day before open enrollment closed, the Kynect call centers received more than 11,000 calls, Banahan reported. New York enrolled 100,000 people in health coverage in its final weeks, including 9,000 on that final Sunday! 

On the final Sunday in Washington State, more than 10,000 people called the call center. At 11:45 p.m., they still had 2,000 unanswered calls logged in the system, said Washington Health Benefit Exchange CEO Richard Onizuka.

That’s why Washington State has extended its deadline to April 17 for those who started an application by February 15 but didn’t finish, as well as for those who did not realize they would have to pay a tax penalty. 

Looking beyond open enrollment

In the future, more and more consumers will be aware of the health insurance marketplace in their state, the tax penalty for not having health coverage, and the subsidies that are available to help them buy a plan. 

“As we move forward, open enrollment will become less and less important,” said Peter Lee. 

As education and outreach efforts spread, more people will understand that they can qualify to buy affordable health insurance. 

“As people earn more income and are no longer eligible for Medicaid, they can sign up for health insurance” said Lee. “When people age off of their parents’ health insurance, they can sign up for health coverage. People are beginning to realize that the exchanges are here for them [not just during open enrollment].” 

Read more highlights of our monthly calls with enrollment experts and state marketplace directors.