Q: On what date will I incur a penalty for not enrolling in the exchanges? Is it the first day after open enrollment closes?
A: The first penalties for failure to maintain minimum essential coverage (not necessarily an exchange plan) will be calculated when people file their 2014 tax returns in early 2015. Even though the ACA imposes the individual mandate penalty on people who go more than three months without health insurance, HHS has announced that anyone who enrolls in coverage at any time during the initial open enrollment will not be assessed the penalty for 2014 as long as they remain insured for the rest of the year.
Enrolling on March 31 – the last day of the initial open enrollment window – would result in a policy that’s effective May 1. For applicants who were previously uninsured, this would mean a period of four months (January through April) without health insurance in 2014.
This would normally run afoul of the individual mandate and trigger a penalty, since it’s in excess of the three-month “short gap” allowance. But HHS is granting a one-time exception in order to avoid confusion and allow people to take advantage of the full six months of open enrollment.
If you choose to not enroll at all however, and remain uninsured for more than three months in 2014, you will be assessed a penalty of $95 per uninsured adult (half that amount for children, family maximum of $285) OR 1% of household income in excess of the tax filing threshold, whichever is greater. (The penalty amounts increase in subsequent years.)