ObamaCare fines loom for uninsured

People without insurance are running out of time to avoid the hefty ObamaCare penalties that the IRS will be handing down in 2016.

Consumers face a Feb. 15, 2015, deadline to buy insurance, after which those without coverage could be hit with fines of $325 per adult or 2 percent of family income, whichever is higher.

Uninsured people looking to escape the penalties are turning to the exchanges before they close, while insurance companies and tax preparers are seizing on the looming tax hit as a business opportunity.

One recent mass mailer from CareFirst BlueCross BlueShield obtained by The Hill warned potential customers in the Washington, D.C., region that going without health insurance coverage would come with a steep cost.

“When you don’t have health insurance ... you put your financial security at risk,” the mailer states. “That’s because under the new Affordable Care Act legislation, millions of Americans will have to pay an increased penalty tax of at least 2 percent of their income in 2015 if they go uninsured.”

The “good news,” the letter said, is that CareFirst BlueCross BlueShield has “solutions” to help people avoid the penalty, including coverage that is “compatible with financial assistance or free money from the government that will help qualifying individuals pay for insurance.”

The company declined to comment on the mailer.

The message is part of a shift in focus for the health insurance industry as ObamaCare continues a relatively smooth second year of enrollment.

Last fall, issuers were hesitant to mention the mandate as technical glitches plagued HealthCare.gov and stopped some consumers from enrolling.

The penalties for going without health insurance were also more modest, with uninsured people due to pay $95 per adult or 1 percent of family income this tax season. Under the second-year enrollment rules, families that forgo insurance could end up owing $1,000 or more.

Tax preparation companies are touting their expertise in handling the IRS’s ObamaCare rules as they gear up for a new filing season.

Part of the pitch is helping consumers avoid the mandate through an exemption if they are eligible. 

A variety of hardship qualifications makes this route possible for many people, including those who experienced the death of a close relative, had their previous health plan canceled or saw an increase in necessary expenses due to caring for an aging family member.

“There are a lot of people who will qualify for an exemption,” said Avalere Health CEO Dan Mendelson. “If a company can save someone the 2 percent fine on $50,000 of income, that is significant.”

Firms are also offering to help current enrollees understand how changes in income can affect their tax credits to buy coverage. In some cases, they can also help the uninsured select health plans.

In promotional materials, H&R Block and Jackson Hewitt Tax Service say they can provide consumers relief, arguing that healthcare reform is making tax planning more difficult.

“The ACA [Affordable Care Act] has changed the landscape of both healthcare and tax,” H&R Block states online, inviting consumers to calculate their mandate penalty or receive a “tax impact analysis” when they become a client.

Jackson Hewitt urges consumers to stop by one of its locations, promising that their employees “work harder to keep up with the latest tax law changes to protect you from possible penalties — not everyone else does.”

The marketing around the healthcare law is taking flight at a time when surveys show the public remains deeply confused about the mandate.

Almost half of U.S. adults are unaware they must report their health insurance status on their 2014 tax returns, according to a TurboTax survey released earlier this month.

And while about three in five uninsured people know the law penalizes people without coverage, nearly 90 percent do not realize the 2014 deadline has already passed.

As a result, experts are urging insurers and the federal government to do more to emphasize the mandate this enrollment period.

Mendelson said the insurance industry is talking about the penalties more than last year, though the Obama administration has not yet adopted that approach.

“You have to remember that most people will sign up for this benefit in the very last weeks before they have to, so you wouldn’t want to message negatively until the end,” he said. “They have a choice about whether to motivate by fear or by benefit. I think the fear might come late.”

Anne Filipic, president of the campaign-style group Enroll America, said the mandate is coming up more frequently this year.

“We will always lead our conversations with the great benefits that are available to consumers,” Filipic said in a joint interview with The Hill and The Wall Street Journal last month.

“As for the fine, that is something that we will communicate to consumers about as well. It’s about delivering the facts.”