Obamacare fines look less likely as exemptions swell

Almost 90% of uninsured Americans won't pay a penalty under the Affordable Care Act in 2016.

By Money Staff Aug 7, 2014 11:59AM

This post comes from Stephanie Armour at partner site The Wall Street Journal.

The Wall Street Journal on MSN MoneyAlmost 90 percent of the nation's 30 million uninsured won't pay a penalty under the Affordable Care Act in 2016 because of a growing batch of exemptions to the health coverage requirement.

The architects of the health law wanted most Americans to carry insurance or pay a penalty. But an analysis by the Congressional Budget Office and the Joint Committee on Taxation said most of the uninsured will qualify for one or more exemptions.

Daphne Gaines expects to be one of them. She said recently she got an electricity shut-off notice, which is one way Americans can get out of paying a fine. "I don't think I should have to pay any penalty," said Ms. Gaines, 52, of Jasper, Ala., who works part time at a church preschool and a drug recovery clinic.

The Obama administration has provided 14 ways people can avoid the fine based on hardships, including suffering domestic violence, experiencing substantial property damage from a fire or flood, and having a canceled insurance plan. Those come on top of exemptions carved out under the 2010 law for groups including illegal immigrants, members of Native American tribes and certain religious sects.
Factoring in the new exemptions, the congressional report in June lowered the number of people it expects to pay the fine in 2016 to four million, from its previous projection of six million. Also bringing down the total: At least 21 states have opted not to expand the Medicaid insurance program for lower earners under the health law, and those residents may be exempt from the penalty.

A legal battle over subsidies provided through the federally run insurance exchange could increase the number of Americans entitled to exemptions. In July, a Washington, D.C., appeals court struck down the federal exchange's authority to issue insurance tax credits on the grounds that the health law limits them to state-run exchanges. A Virginia appeals court upheld the subsidies, setting up a legal fight that is likely to go before the Supreme Court.

More than 4 million Americans get subsidies on the federal exchange used by up to 36 states. If the subsidies ultimately are struck down, more people could qualify for hardship exemptions based on their inability to afford coverage.

The exemptions are worrying insurers. The penalties were intended as a cudgel to increase the number of people signing up, thereby maximizing the pool of insured. Insurers are concerned that the exemptions could make it easier for younger, healthier people to forgo coverage, leaving the pools overly filled with old people or those with health problems. That, in turn, could cause premiums to rise.

Patrick Getzen, vice president and chief actuary at Blue Cross and Blue Shield of North Carolina, said he saw more "older and sicker people" enrolled in 2014 than projected. He attributed some of that to the weakened mandate. "With a stronger penalty and less broad exemptions, that would be better for the risk pool."

The Obama administration argued before the Supreme Court in 2012 that the individual mandate was an essential component of the law's insurance-market changes, and the court narrowly upheld it on the grounds it is a tax. Now, Republicans who oppose the law say the administration has undermined that requirement with the exemptions and should waive the mandate entirely.

"If your pajamas don't fit well, you don't need health insurance," said Douglas Holtz-Eakin, former director of the Congressional Budget Office and president of the American Action Forum, a conservative think tank. "It basically waives the individual mandate."

The White House referred questions about the exemptions to the Centers for Medicare and Medicaid Services, or CMS, which oversees implementation of the health law. CMS spokesman Aaron Albright said the legislation allows those facing a hardship to apply for an exemption, and their applications are reviewed on a case-by-case basis. "The Affordable Care Act requires people who can afford insurance to buy it, so that their medical bills are not passed onto the rest of us, which drives up health care costs for everyone," he said.

The idea that Americans carry insurance or pay a penalty has been contentious since its inception. In an early version of the legislation, former Sen. Max Baucus (D., Mont.), then chairman of the Senate Finance Committee, floated a penalty of up to $3,800 a year for families who went without insurance. Republicans were turning against the requirement as the tea party gained momentum, and Mr. Baucus began whittling the penalty in hopes of gaining their votes.

That didn't happen, but lower penalties stayed in place in the final legislation. The fine for not carrying insurance in 2014 is $95 per adult, or 1 percent of family income, whichever is greater. That increases to $695 per adult, or 2.5 percent of family income, by 2016. The total family penalty is capped at 300 percent of $695—$2,085 in 2016.

While the health law was being written, President Barack Obama had pledged that Americans who liked their insurance plans would be able to keep them. But last year millions of people were informed their plans would be discontinued because their policies didn't comply with minimum-benefit requirements.

Medical doctor © Corbis/SuperStockThe resulting furor caused the administration to allow insurers who had planned to discontinue policies to extend them by a year. Some insurers and states, however, decided not to do so.

In an effort to address the problem without disrupting the roll out, the administration said consumers with canceled plans could qualify for a hardship waiver, then could buy minimal coverage initially intended only for individuals under age 30.

That sparked objections from an insurance industry long concerned the mandate was already too weak. "To make these new reforms work, there needs to be broad participation in the system," said Karen Ignagni, president and CEO of American's Health Insurance Plans, the industry's largest trade group.

The exemption was initially for one year. The administration has since extended it for two more years through October 2016.

In December, a hardship application form was released that laid out the 14 exemptions. Among other things, people could avoid the penalty if a close family member had died recently, if they were facing eviction or if they had medical expenses that couldn't be paid in the last 24 months and resulted in substantial debt.

Critics have assailed one exemption for people who "experienced another hardship obtaining health insurance" as too broad. That exemption asks for documentation if possible but doesn't require it.

Damian Trujillo, 33 years old, of Salt Lake City, said he is hoping for an exemption under that category. The rehabilitation-facility caseworker went online during the enrollment period but was ineligible for tax credits, he said, and decided he couldn't afford federal-marketplace coverage.

"I still want to get insurance. I just can't right now," said Mr. Trujillo, who has allergies and asthma.

Nathan Maxwell, 37, also doesn't expect to pay the penalty. He belongs to a health-care sharing ministry, which is exempt under the law.

"You join the program and monthly you're assigned a predetermined share of another member's medical bill," said Mr. Maxwell, founder of ITonRamp, a Christian training resource focused on computer skills and based in Leavenworth, Kansas.

His wife recently gave birth prematurely to a boy who spent days in a neonatal intensive-care unit. The medical costs, which he expects could hit $70,000, will be covered by others in the ministry.

CMS said about 77,000 individuals and families had requested an exemption as of April, the most recent data available. That doesn't capture everyone likely to apply because many exemption requests can only be claimed on tax returns filed next year.

There is pressure to widen exemptions further. Christian Scientists want to avoid the coverage requirement because they generally adhere to spiritual healing.

While the law provides an exemption for religious groups with an objection to programs such as Social Security, that doesn't cover Christian Scientists.

They have launched a lobbying campaign to push for legislation that would grant them a waiver.

After hearing from Christian Scientists, Rep. Aaron Schock, (R., Ill.) introduced a bill to exempt individuals with sincerely held religious beliefs against conventional medical care. The House passed it unanimously in March.

The Senate's proposed version is narrower. In essence, individuals would have to be part of a religious tradition that relies solely on faith healing.

"I don't want to get insurance because I don't use insurance," said Ron Meyer, 24, a Christian Scientist and president of Springboard Media Strategies LLC, a public-relations firm in Herndon, Va. "It is serving two masters if you're paying a medical system for something you don't believe in."

More from The Wall Street Journal


Aug 7, 2014 1:03PM

If you have a job, live within your means, save for retirement, and own a home, WATCH OUT!  90% of the folks who think you owe them want what you have, and the Obama government will take it from you and give it to them.  It's already happening.

Aug 7, 2014 12:25PM

so 90% won't have to pay, so I guess the money will have to come from the other 10%?


Democrats like to talk fairness.  How is that fair?

Aug 7, 2014 12:43PM
Seems like the IRS always looks the other way when the Democrats don't pay their taxes.
Aug 7, 2014 12:38PM
How are exemptions swelling?  Was the law changed yet again without the approval of congress and done by fiat by the president?
Aug 7, 2014 1:00PM

Yet another example of how the Obama administration just unilaterally changes any law as they see fit without any congressional action.   You liberals better be happy with this now, because there will come a time when a Republican president will be doing the same thing, and you'll be staunchly opposed to it.   Guess what?  I'll be right there with you.  The difference is that I'm opposed to it right now as well.   It's called being consistent.  Such action can also be described as being a patriotic American and standing up for the Constitution... regardless of the party in power.   You liberals (both Republican and Democrat) should try it sometime.


I also just got back from voting in our state Republican primary   I didn't vote for any incumbent Republican representative or senator.... just as I haven't voted for any incumbent representative, senator, governor, or president, for over a decade now.   If you keep voting in the same corrupt idiots, don't expect things to change.   If you think your incumbent is okay, but it's someone elses representative that's the problem....then you're being played for a fool.

Aug 7, 2014 1:42PM
Democrats like the feeling of helping the unfortunate and down-troden but they want someoe else to pick up the bill.  They wanted to feel god about insuring people but then want everyone else to pay for their good feeling.  They want to let in thousands and thousand of illegals but not one GD one of them is opening their checkbook to write out a $90K check to cover their expenses for a year.  That amount, by the way, is based on the fact the government is paying $7,500 a month to "foster families".  We are still paying for the Cash for Clunkers, and the medicare fraud and food stamps and section 8 and cell phones and free internet for all these freaking people, guess that just wasn't enough..  In 20 years who will be left to pick up the tab?  The illegals with their third grade education?  Doubtful.
Aug 7, 2014 12:28PM

if you get a notification from the electric company that your electricity will be shut off, you don't have to pay the fine?


Cool, i'll just skip paying my electric bill for 3 months, that way I get the notice, and can show that to obama and he will waive my penatly due to hardship

Aug 7, 2014 1:40PM
This is funny. The high courts already said they can't do anything to collect the fines.

 So just don't pay. No way for them to collect. They can't take your wages, can't levy anything.

 I will never get Obamacare.................

 I am almost 50 and only had one thing that I had to be admitted and I paid cash for that $7,500.00.
And if you look at the plans under Obama I saved..

 A friend of mine will have to pay almost $16,000.00 a year before insurance even picks up his tab and that is on top of the $343.00 a month he has to pay the insurance company.

 Tell me again how Obamacare is affordable...

Aug 7, 2014 1:44PM
more wealth redistribution.  and more takers than makers!!!   this country freakin' amazes me.  how is that hope and change working for you....................................people who work?
Aug 7, 2014 1:56PM
Don't forget to add all the Unions to the list of exemptions - seems like everyone who votes Democrat gets an exemption....this is the most blatantly corrupted party in American history.
Aug 7, 2014 2:19PM

First, let me say that I am shocked we are able to comment on this. The majority of columns on MSN that touch on issues with this administration do not contain a "comments" section.

This law was shoved down the throats of the citizenry. "We have to pass it to know what's in it." Every time something comes up the President pencil whips it to quench the furor. It was given the bums rush to pass and now there has been a total disregard to the process at every turn. The Constitution set up a process so that one individual did not have this much power. There are no "checks and balances", just checks which the working Americans are forced to cash.

Last year my premiums went up by 20%, deductibles went up and coverage went down. We have already received notice that they will go up again for 2015.

What happens when the only people that have any money run out? Record numbers of people renouncing their citizenship. Businesses running away. Spending money we don't have and then printing more to make it look like we have some.

Both parties are so screwed up. We will be lucky to survive.

Question: How can a commercial advertise saving a child for $.28/day and yet we want to spend $250-$1000/day for a child that illegally crosses our border?

Aug 7, 2014 2:21PM
And who gets to pay for all this Fu&^ing crap? All of us hard working taxpayers. Obo and his plan need to go NOW!
Aug 7, 2014 2:52PM
Everyone is exempt except white men.
Aug 7, 2014 2:55PM
America is wising up to this POTUS finally.  New poll numbers are damning.  But the dude can sure do a lot more damage in 2 years.  If you voted for Obama once, or, even worse, twice, I hope you hang your head in shame.
Aug 7, 2014 1:02PM

At this point, the only thing left of the PPACA are subsidies to insurance companies and rents to states that set up exchanges, and of course the destructive excise tax on medical equipment.

Any guess what this administration would do with comprehensive immigration reform? All amnesty, no enforcement.

Aug 7, 2014 12:41PM
Obbaaammmaaa - be a neurotic loser - become a proud Democrat.
Aug 7, 2014 2:15PM
These Penalties will be used to PUNISH political enemies and reward friends.  They already are...

If you are the victim of domestic violence, you don't have to have insurance. Well, if your husband kills you, you certainly won't need it.



All Obamacare fines should be paid by the uninformed voters that helped put Obama in office.
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.