By Tara Mancini

While open enrollment for Marketplace plans extends to March 31, 2014, there’s been some concern that an earlier date—February 15—marked the deadline for those without coverage to sign up to avoid tax penalties for going without insurance. On Monday, CMS released additional guidance on the ACA’s individual shared responsibility requirement to address this concern. The guidance clarifies that those who enroll in a plan through the Marketplace by the end of the initial open enrollment will not be subject to the shared responsibility payment due to the effective date for their coverage.

Previously, the length of the open enrollment period and the coverage effective dates meant that uninsured individuals who enroll between February 16 and March 31, 2014, could have been subject to the shared responsibility payment when filing taxes in 2015.  Their coverage will be effective April 1 or May 1, 2014, but the short coverage gap exemption, one of the nine statutory exemptions from the shared responsibility payment, would not have been available for those whose coverage was effective April 1 or later.

To remedy this inconsistency, HHS is using its authority granted by the ACA to create an additional hardship exemption to provide relief to those individuals who enroll toward the end of the initial enrollment period and who do not qualify for another exemption. This additional hardship exemption also ensures that the shared responsibility payment is applied as intended – to those with access to affordable coverage who choose to go without coverage for an extended time.

More guidance will be provided in 2014 on how individuals can claim this hardship exemption.  There are many reasons for those without coverage to sign up sooner—they can protect their health and financial security and they won’t be denied or charged more for pre-existing conditions, among others.  But for those who wait, February 15 is no longer a deadline—they don’t need to worry about tax penalties until after the end of March.