MNsure bets people will buy health insurance to avoid fines

Community health workers offer assistance.
Community health workers offer assistance to those applying for health insurance with MNSure at Portico Healthnet, March 31, 2014.
Jeffrey Thompson | MPR News 2014

As the outreach program manager at Portico Healthnet, a nonprofit that helps people obtain health care coverage, Rebecca Lozano's job is to match as many people with insurance plans as she can.

Lozano welcomes an extended effort by MNsure, the agency that runs the state's online health insurance marketplace, to convince more people to sign up for health plans.

"Any extra opportunity we can provide for people to enroll, to get coverage and to access health care coverage is an important aspect of the work we do," said Lozano, whose priority is helping low-income people of color.

Later today, MNsure will announce its progress toward meeting it latest goal of enrolling 67,000 people in private health plans for 2015. MNsure officials aim to attract more private-plan buyers with yet another special enrollment period. It offers anyone hit with a federal tax penalty for not having health insurance last year a chance to avoid another tax penalty.

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The special enrollment period runs through the end of April.

Maximizing commercial plan enrollment is important to MNsure. Each enrollment includes a 3.5 percent surcharge on insurance premiums to fund MNsure operations.

Last fall, MNsure dramatically downgraded its 2015 private plan enrollment goal from 100,000 people to 67,000. But as of mid-February, the exchange was nearly 7,000 short of that goal.

The number of people who paid a penalty for not having insurance in 2014 and will enroll in a plan to avoid having to pay again is undetermined, MNsure spokeswoman Jenni-Bowring McDonough said.

"This special enrollment period is truly designed to help consumers," she said.

The penalty for not having health insurance in 2014 is 1 percent of household income or 95 dollars, whichever is greater. This year, the fine is much larger: 2 percent of household income or $325, whichever is greater.

Late enrollees will not entirely escape penalty for 2015. Under the law, people were supposed to have coverage effective March 1. But the penalty is prorated so those who want to pay the smallest fine will have to secure a plan by Sunday for insurance that takes effect April 1.

While most people without insurance will get hit with the penalty, exemptions are available for a variety of reasons, such as incarceration, living abroad or financial hardship.

According to a University of Minnesota estimate, only about five percent of Minnesotans were without health insurance in 2014.

Lozano, of Portico Healthnet, said most people know about the penalty. She said those who choose not to buy insurance fall into a few different categories.

"There are certainly folks that just don't agree with it and don't feel like they need to comply," she said. "There are also a fair amount of people that were, for some reason, stuck in the system or didn't have their life change request processed in a good amount of time so that they were actually without insurance for a fair part of the year."

Others, Lozano said, think they can't afford health insurance, even if they receive a federal subsidy.

A recent report by the state legislative auditor criticized MNsure and its leadership for bungling the launch of the health insurance exchange. But it is unclear whether fixes to the agency's online enrollment system, customer service improvements at MNsure and the much steeper penalty for not having insurance this year will inspire people who didn't have insurance last year to buy it now.

CPA Todd Koch
CPA Todd Koch has fielded a lot of tax questions about the Affordable Care Act he said March 3, 2015 in his office in Falcon Heights, Minn.
Mark Zdechlik | MPR News

Todd Koch, a CPA in Falcon Heights, doesn't think very many of his clients owe the tax penalty for being out of compliance last year. But if any do lack insurance, Koch said he's fairly certain they will want to get on the right side of the law this year so they don't have to pay again.

"Absolutely, because no one wants to pay any excess dollars no matter who they are," Koch said. "If they didn't know, part of our process is educating people so at least they can make better choices going forward."