A limited number of higher-income parents with kids enrolled in the Children’s Health Insurance Program are getting more time to shop for health insurance — and avoid a federal tax penalty.
About 3,600 families now have until April 15 to find health coverage. The original deadline was Feb. 15.
“The Wolf administration and the Insurance Department became aware that this deadline was approaching and that these families had not been given any notice of the tax penalty that they might face,” said Michael Race with the Pennsylvania Partnerships for Children.
The extension is only for families who earn 300 percent or more of the federal poverty level – about $70,000 for four people. Those members, sometimes referred to as “buy-in” families, pay full price for CHIP coverage.
For them, the CHIP plan does not meet federal health law requirements as “minimal essential coverage,” so they need to shop to find a health plan somewhere else.
“We’ve pushed the federal government to give these families a hardship exemption,” said Insurance Department spokeswoman Rosanne Placey.
Placey said Pennsylvania has been aware of the problem since late last year. Since then, state officials have been in discussions with representatives from the Obama administration.
“As soon as Gov. Wolf and the new acting insurance commissioner became fully aware there would be no further negotiations about this, they went right to work to find a soft landing for families,” Placey said.
That means families won’t face a tax penalty as long as their child is enrolled in health coverage by the new April 15 deadline.
Pennsylvania is contacting affected families with letters and phone calls to alert those who need to make a change.
Pennsylvania won’t bar higher-income families from buying a CHIP plan, but Placey said there will be a notice to alert them that — for certain people — the coverage is not compliant with Affordable Care Act rules. Lower-income families in CHIP have health plans still compliant with the Affordable Care Act.
So why is CHIP good enough to qualify as minimal essential coverage for low-income children, but not good enough for higher-income kids?
Placey said that’s a question for the federal government.
One analyst guessed that Obama health officials allowed the waiver for low-income families because people on a tight budget have fewer affordable health-insurance options.
A good next step would be bringing the entire CHIP program in Pennsylvania up to federal minimum essential coverage standards, Race said.