White House Proposes Individual Mandate Rules

The HHS rule proposes that health insurance exchanges "tailor an exemption for hardship to particular circumstances that impact an individual, but cannot adequately be predicted in advance. We expect that these circumstances will include, but not be limited to, situations in which an applicant is homeless, receives a shut-off notice from a utility company, faces a natural disaster, or experiences other unexpected natural or human-caused event causing significant damage to the applicant or his or her home."

In the IRS proposed rule, dollar amounts of penalties are spelled out as $95 for 2014, $325 for 2015, and $695 for 2016. They would be increased in the calendar year of 2016 by an amount related to a cost of living adjustment.

Additionally, the administration proposes that individuals who would be eligible for Medicaid, but reside in states that have refused to expand their Medicaid programs, would also receive a hardship exemption.

The rules specify that required "minimum essential coverage" includes employer-sponsored coverage including COBRA and retiree coverage, plans purchased in the individual market, Medicare Part A, Medicaid coverage, Children's Health Insurance Program coverage, certain kinds of Veterans health coverage and TRICARE.

A liberal interpretation of what constitutes a period of time in which a person goes without coverage is offered. For example, the proposal says that if an individual had coverage for one day in a month, he or she is considered to have been covered the entire month. And if the individual is exempt from having to get coverage for any one day of any month that exemption applies to the entire month.

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