HHS Finalizes Exchange Rule

HHS has published the final rule explaining who is exempt from the individual mandate penalty. Would-be Medicaid beneficiaries who lose out on coverage because their states choose not to expand the insurance program for the poor will not have to pay the individual mandate penalty. The rule also says those who go without insurance for three months or less won’t be on the hook, and it spells out alternative types of insurance — self-funded student plans, for instance — that will qualify as meeting the standards for minimum coverage.

The rule also includes an exemption for those caught up in the so-called family glitch involving how the government will gauge whether coverage is affordable and who gets subsidies.The glitch stems from an IRS rule that outlines which employees will be eligible for tax credits. If the cost of individual coverage — but not family coverage, which is far more costly — exceeds 9.5 percent of the worker’s household income, the worker would be eligible for a credit. The administration chose not to base eligibility on family coverage because it would have been too expensive for the government. The new rule would cut those subject to the family glitch a break by exempting family members from the mandate penalty if the cost of covering the whole family is deemed unaffordable.

Employers will not be subject to a shared responsibility payment for employees who do not buy insurance because they claim financial hardship exemptions, or religious belief exemptions.