On October 28, 2013, the federal government issued guidance related to the implementation of the Affordable Care Act (ACA). This most recent guidance clarifies the dates by which individuals can purchase coverage through the marketplace and avoid being subject to the penalty for not maintaining minimal essential coverage.
Prior to the release of this guidance, an individual could purchase insurance through the marketplace during the latter part of open enrollment (between February 16 and March 31, 2014) and still be liable for a penalty because of when their coverage would take effect. Plans purchased on or before the 15th of the month take effect the first day of the next month and plans purchased on or after the 16th of any month will take effect the first day of the second full month. This meant that an individual purchasing insurance on March 16, during open enrollment, would not be covered until May 1. This falls outside of the earlier established continuous three-month period of time when an individual could go without coverage and avoid the tax penalty.
This new guidance ensures that anyone purchasing their insurance coverage at any time during the open enrollment period meets the coverage requirements for 2014, and therefore allows them to avoid the tax penalty. As such, the Department of Health and Human Services has used its authority to establish an additional hardship exemption for individuals who purchase insurance through the marketplace at the end of open enrollment, so that the tax penalty will not apply to them.
More information about the guidance can be found here.
