By Sarah Ferris and Peter Sullivan - 02/19/15 06:00 AM EST
Pressure is building on the Obama administration to give uninsured people a second chance to sign up for ObamaCare before they are slapped with a fine.
People without insurance in 2015 will pay a fine of $325 or 2 percent of their income, whichever is greater, during next year’s tax season.
“Millions upon millions of people are unaware about these penalties,” Ron Pollack, the executive director of the nonprofit group Families USA, said in a briefing Wednesday.
This year’s penalty is up significantly from the $95 or 1 percent of income fine for not having insurance in ObamaCare’s first year.
The first time people will actually pay the fine is in this coming tax season. Just one-third of people without health insurance said they were aware of the healthcare law's penalty in a March 2014 poll by the Kaiser Family Foundation. The administration estimates that as many as 6 million people will be forced to pay up this spring.
Many are confused when they are told of the penalty.
Peter Lee, the executive director of California’s exchange, said he has seen “thousands of cases of consumers who literally walked across the street from a tax adviser” to enroll in his state’s exchange.
The pressure on the administration is coming from advocacy groups, Democratic lawmakers and states that are extending or adding to their enrollment periods.
Minnesota on Wednesday became the second state to add a grace period through the end of tax season in April. California and New York, the two largest state exchanges, are also mulling an extension, as is Kentucky, state officials said Wednesday.
California will decide by early next week whether to create the special period — an idea that the state’s Health secretary said Wednesday that she supports.
“I think now people are just realizing they have to pay,” California Health Secretary Diana Dooley said at a panel hosted by the Advisory Board Company.
If the administration doesn’t provide another enrollment period, it could create a situation where residents of some states have more time to avoid the tax while people on the 37-state federal exchange do not.
The administration hasn’t ruled out adding the enrollment period, and Health and Human Services Secretary Sylvia Mathews Burwell said Wednesday that she plans to make a decision by next Friday.
“We’re going to analyze it, we’re going to think about it, and we’ll be back,” she told reporters on Wednesday. “What we [will] try to do is focus deeply on the issue of the consumer.”
Sen. Tammy BaldwinTammy BaldwinOvernight Finance: Wall Street awaits Brexit result | Clinton touts biz support | New threat to Puerto Rico bill? | Dodd, Frank hit back Dem hopeful that Congress will eliminate tax break for investment fund managers Congress should stop government hacking and protect the Fourth Amendment MORE (D-Wis.) led a group of 10 Democratic senators this week who wrote a letter to Burwell urging a new period. Separately, Sandy Levin (D-Mich.), the top Democrat on the Ways and Means Committee, signed a letter with two other Democrats to “strongly urge” the administration to give extra time.
“For the many families who may now be about to pay a penalty, there should be an opportunity to avoid both further penalties and to obtain affordable health insurance,” Rep. Lloyd Doggett (D-Texas), who signed the letter with Levin, wrote in a statement.
Republicans have been largely quiet on the issue, with several chairmen declining to comment. Rep. Marsha BlackburnMarsha BlackburnWhy won’t Obama’s FCC leave Us alone? Calls for Lynch to resign over claim that ‘love’ is best response to terror GOP targets net neutrality despite court ruling MORE (R-Tenn.), vice chairwoman of the House Energy and Commerce Committee, opposes a new enrollment period and called the IRS penalty "an unwelcome reminder" of the law.
Some health policy experts warn that an extra signup period could add risk to insurance pools. They argue that if enrollment periods aren’t limited, people will wait until they get sick to sign up.
But Pollack, the Families USA director, said the new period would not cause harm to insurance pools “to any significant extent." Lee, the California director, added that insurance companies are “not concerned” about the effects.
Still, he warned of at least one unintended drawback.
“Consumers might think in the future that these deadlines don't matter,” Lee said.